Rising prices and borrowing costs have left Britain’s 1.7 trillion pound mortgage market in a bind. Rates on the average five-year fixed-rate housing loan are around 5.67%. That’s the highest level since they topped 6% after the infamous “mini-budget” that led to the departure of Sunak’s predecessor Liz Truss. Some 800,000 borrowers still need to refinance their loans this year, followed by a further 1.6 million homeowners next year, according to UK Finance.
the average homeowner who renegotiates their mortgage in 2024 will have to pay an extra 2,900 pounds a year.the opposition Labour Party by 16 percentage points – Sunak cannot afford to do nothing. But neither can he afford to offer state aid to homeowners. That’s because the public finances are stretched and investors are monitoring Britain’s debt levels following the disastrous “Trussonomics” experiment.on Tuesday he would talk to lenders.
The problem is that mortgage relief dilutes the Bank of England’s fight against inflation, which remained stubbornly high at 8.7% in May. Higher borrowing costs are the central bank’s main tool for crimping demand. Government interference in mortgage lending could force the BoE to even more aggressively raise rates, already at the highest level since 2008.
Not everyone is affected by the squeeze. The share of UK households with a mortgage has fallen below 30%, from nearly 40% in 1989, because more older people own their homes outright while younger people rent. Yet the ruling Conservative Party has spent years home ownership. Sunak’s chances of remaining at his current address after the election hinge on his ability to ensure that millions of Britons can stay at theirs.