September 28, 2022, 06:30 | Updated: September 28, 2022, 08:10
Sir Keir Starmer told LBC today that he is “extremely concerned” about rising mortgage rates and revealed that his mortgage payments have gone up “by a few hundred pounds”.
He said his sister, a care worker, had been struggling with energy bills and only had “a small amount of money in the bank.”
He said the government’s actions on the economy were “beyond normal policy,” adding that the mortgage situation was causing “extreme anxiety” for millions of people and that governors had “lost control of the economy.”
His comments come after banking experts warned that homeowners faced mortgage chaos with fears interest rates could reach 5.5% by November.Read:My son is desperate to get on the property ladder — here’s what I’ve told him to do
Hundreds of mortgage deals were pulled from the market in a stampede after the chancellor’s mini-budget last week.
Experts said they fear interest rates will rise to 6 per cent next year and that the Bank of England will announce another 1.5 per cent increase by November.
Halifax, Virgin Money, HSBC, Santander and Skipton are all among the banks that have done deals in the past two days.
Bank of England Chief Economist Howe Bell said yesterday: “We have all seen significant financial news lately. This has had major consequences for the market as well as major implications.”
Read more: Chancellor urged to rethink tax plans as IMF launches unprecedented attack saying it will increase inequality
READ MORE: Truss and Mini Quarting blame Conservatives . huge labor poll surge
Speaking at the International Monetary Policy Forum, he said: “In the context of rebalancing the market environment and anticipating a looser fiscal policy, it is hard not to conclude that this will require a significant monetary policy response. Let me leave it there.”
Nearly 1.8 million fixed-rate mortgages are due to expire next year.Read:Martin Lewis’ MSE says Boots shoppers who buy £80 item will get £330 of Christmas gifts
For a homeowner with a two-year fixed mortgage of £200,000, the £800 monthly interest payments will increase to £1,103 if interest rates rise to 3.25 per cent as expected by the end of this year, meaning homeowners need to find An extra £3,156 a year, according to AJ Bell.
If rates rise to six per cent, this would jump to £1,408 a month or an additional £7,296 a year.
The International Monetary Fund has issued an unprecedented statement criticizing the UK’s tax plans, urging rethinking and saying they will increase inequality.
An IMF spokesperson said: “We are closely monitoring recent economic developments in the UK and are working with the authorities.
“Given high inflation pressures in many countries, including the UK, we do not recommend large and untargeted fiscal packages at this point, as it is important that fiscal policy not operate for purposes that conflict with monetary policy.”
A homeowner already grappling with the cost of living crisis is facing more pressure, and first-time buyers will face average mortgage bills of £1,100 a month.
One wrote online: “My mortgage is fixed at 2% for five years. It expires next June. I am so afraid. I think we may end up homeless.”
Another wrote: “I’m so scared. I’m a single mom with kids and adopted kids and I can’t afford the mortgage if interest rates go up any more. Low salary but working overtime to cover costs and now even that won’t be enough. HELP!!!”
The British pound stabilized in early trading in Asian markets on Tuesday, recovering slightly.
Sterling sat around $1.08 by 7am, but economists have warned that it could still fall to parity with the dollar this year for the first time.