HOMEOWNERS have been warned over a mortgage “ticking time bomb” after it was revealed interest payments could double over the next year.
Included in the analysis of Chancellor Jeremy Hunt’s autumn statement by the Office for Budget Responsibility (OBR), a stark forecast shows that mortgage interest payments could soar by 100.5% per cent in the year to September 2023 – outstripping the previous record 63.6% rise in 1989.
Analysis carried out into the OBR forecasts shows that a typical household with an outstanding mortgage of £236,000 will see their interest payments double to £5,689, or an increase of £2,851 a year.
Opposition politicians at Westminster have claimed this is a direct result of the Conservatives’ disastrous mini-budget that sent markets into turmoil and forced the Bank of England to raise rates.
A warning has been issued that the crippling increase to mortgage interest could pose an even bigger threat to homeowners than the 2008 financial crisis and see thousands of families at risk of losing their home.
The LibDems are calling for a new rescue fund for those who have seen their mortgage payments increase by more than 10% of their income, with grants of up to £300 a month to help cover the cost of the rise.
The party claims this would protect families from falling into arrears or losing their homes because they can’t afford costs.
The policy would be funded by scrapping tax cuts for the biggest banks, according to the LibDems.
UK Government cuts to the bank surcharge and bank levy are expected to cost £18bn over the next five years.
Liberal Democrat Treasury spokesperson Sarah Olney said: “Homeowners are paying the price for the Conservative Government crashing the economy.
“The mortgage ticking time bomb has only seconds left. The coming months will see mortgage payments implode, leaving families paying hundreds of pounds more a month This is simply unmanageable with the tax rises announced by the Chancellor.”
She added: “This was the cost of chaos budget where everyone pays the price. It is becoming clearer by the day that families who own a home will pay the ultimate price for months of chaos.
“Something has to give. The Government needs to clean up their mess and save families who face losing their home. They need to scrap the tax cuts for the banks and introduce an emergency mortgage protection fund”.
SNP MSP Paul McLennan added: "People's mortgages, pensions and living standards are under huge threat right now because of the calamitous decisions taken by a government and Prime Minister Scotland did not vote for – and independence is the only way to ensure a different, better future for people across Scotland.
"It is profoundly unfair that households across Scotland are suffering a Tory made cost of living crisis and being forced to pick up the bill for Westminster decline, damage, and woeful mismanagement."
"It's clear that Scotland can do far better free from Westminster control - with the full powers of a normal independent country that allows decisions to be taken in Scotland that can secure fiscal stability, sustainability and a wellbeing economy that works for everyone."
Mortgage interest rates are calculated in line with the Bank of England base rate, which has been hiked to 3 per cent in an attempt to lower rates of inflation.
A UK Government spokesperson said: “We have taken difficult but necessary decisions to provide stability to the economy and markets, including mortgages.
“As the Chancellor made clear, sound money and a stable economy are the best ways to deliver lower mortgage rates, more jobs, and long-term growth. The Autumn Statement puts the public finances onto a sustainable footing, with debt as a proportion of the economy falling by the end of the forecast period."
“We are also helping people with the cost of living by capping household energy bills through this winter and next and are providing those on means-tested benefits with additional payments of £900.”
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