Sadiq Khan has warned that Liz Truss’s ‘mini-budget’ is still being felt in Londoners’ mortgage costs, which City Hall says are in some cases more than £200 higher as a result.
Almost 18 months on from the short-lived PM’s September 2022 ‘fiscal event’, an analysis by the mayor’s team has shown that first-time buyers and those re-mortgaging in London face paying £209 more each month on their mortgage.
City Hall’s research found that a first-time buyer in the capital, taking out an average mortgage on typical terms at rates quoted in January 2024, would pay around £209 a month more than they would if taking out the same mortgage in August 2022, just before the mini-budget was set – equivalent to over £2,500 a year.
Mr Khan called on ministers to “urgently reinstate mortgage payment holidays to prevent a wave of repossessions”, but the Treasury insisted support was already available thanks to the Government’s ‘mortgage charter’. They added that with high interest rates being seen “across the developed world”, the UK is “no different”.
The mayor voiced his concerns as YouGov polling commissioned by City Hall shows that more than four in ten (42 per cent) Londoners from households with a gross income of less than £60,000 per year expect to struggle to meet their mortgage payments in the next six months, up from 34 per cent last August.
Mr Khan said: “The Government’s catastrophic mini-budget has destabilised our economy, sky-rocketed interest rates, and added hundreds of pounds onto mortgage bills each month, leaving thousands of first-time buyers and London homeowners on the brink of financial devastation.
“The Government have so far failed to recognise the scale of the crisis and take accountability for their reckless actions which have far-reaching consequences. I will not be silent as more and more Londoners struggle to make ends meet and are forced to give up on their dreams of homeownership.
“I’m calling on ministers to urgently reinstate mortgage payment holidays to prevent a wave of repossessions across the capital and give London the proper funding it needs to accelerate the building of more genuinely-affordable homes, helping to build a better, fairer London for all.”
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City Hall said the mayor was also calling on the Government “to reverse cuts to support for mortgage interest through the social security system and allow owners in significant difficulty to switch their housing tenure to affordable rented or shared equity to allow them to remain in their homes”.
Responding, a HM Treasury spokesman said: “Interest rates are high across the developed world as economies work to tackle high inflation and the UK is no different. While it is welcome news that we have met the pledge to halve inflation, we know many people are continuing to struggle.
“We have allocated £4 billion to the Greater London Authority to support first time buyers and deliver much needed affordable housing in the capital. Our support contributed to the delivery of more than 130,000 new affordable homes in London.
“We advise anyone struggling with their mortgages to use our Mortgage Charter, which can make it easier to manage monthly repayments and gives extra protections against repossessions.”
At the start of this year, banks and building societies were engaged in a mortgage price war which saw many of them repeatedly cut the cost of fixed-rate mortgages, but the last few weeks have seen some of those cuts reversed.
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