UK Government Must Work Across Party Lines to Help Stirling Households
Stirling MP Alyn Smith has called for renewed focus from the UK Government on the growing mortgage crisis, as fresh figures reveal the increased financial costs potentially faced by the 740,000 households in Scotland with a mortgage.
The House of Commons analysis, commissioned by the SNP, found that following the Bank of England’s shock interest rate rise to 5% on 21st June, households with an average £166,431 mortgage in Scotland, getting an average 6.37% two year fixed rate deal, will be paying 52% more each month than they would have paid a year and a half ago in November 2021.
In November 2021, the average two year fixed rate mortgage was 2.29%, which would see such a typical Scottish household paying £729 a month on a 25 year mortgage. As on 29th June, the average two-year fixed rate was 6.37, leaving the same household paying £1110 a month – an increase of £381 a month and a whopping £4,572 additional interest a year.
A full time worker in Scotland on the National Living Wage would have to forgo their entire wage for more than a quarter of a year (3.24 months) just to pay the additional mortgage interest.
The UK has higher inflation than the EU, US and any country in the G7. Last week, Schroders Plc forecast the UK is heading for interest rates of 6.5% by the end of 2023, the highest since 1998, and warned “we anticipate rates at this level will drive the UK economy into a recession”.
If the average two year fix were to rise accordingly to 7.87%, the same household would be paying £541 more a month (£1270) and £6,492 more a year – an increase of 74% on the average rate in November 2021. Such an increase would require a full time worker on the National Living Wage to forgo almost five months (4.6) of their annual wage just to pay the additional interest.
It comes amid growing warnings about the impact of Brexit on the economy and UK inflation. In June, former Bank of England governor Mark Carney warned Brexit is causing “a weaker pound, higher inflation and weaker growth” – with the OBR forecasting a 4% hit to GDP and 15% blow to UK trade intensity.
Stirling MP Alyn Smith said:
‘This is catastrophic to households in Stirling and all over Scotland, and will be felt across the private rental market too as tenants, landlords and homeowners are left paying the price for the UK Government’s awful economic management.
‘Scotland simply does not have the powers devolved to our Scottish Parliament to address the 13 years of economic decline we’ve experienced in the UK, with the UK Government mismanaging, misusing or simply refusing to deploy the policy levels at their disposal. High inflation and Brexit are only exacerbating the cost of living crisis, and it’s households and businesses across Stirling who are suffering.
‘The Prime Minister should drop the rhetoric, and work together with all parties and none to address the root causes of the cost of living crisis, and kick-start a positive policy cycle which will begin to reduce inflation, the soaring cost of food, energy and other bills, and help to stabilise the teetering UK economy.’