Mayor Dan Norris has demanded government action so banks must help families struggling with crippling payments as mortgage rates reached a 15-year high, after the Bank of England shocked economist by raising interest rates by half a percentage point to 5%.
The Metro Mayor is urging ministers to back a five point plan to ease the “Tory mortgage penalty” and stop people in the West of England from losing their homes.
Nationally 1.4 million mortgage-holders will lose at least a fifth of their disposable income in additional payments.
Under the Labour proposals backed by the Mayor, borrowers would be allowed to switch to interest-only payments for a temporary period or lengthen the term of their mortgage if they are in difficulty.
They would be able to switch back if the situation got better.
Banks would also have to wait at least six months before seeking to repossess a property, and make sure none of the other four policies had an impact on people’s credit ratings.
Metro Mayor Dan Norris who has responsibility for economic development in his West of England region said: “This Conservative Government mortgage penalty is devastating for families in the West of England.
“While ministers squabble over who attended which lockdown-breaking bash and who didn’t, thousands in my patch are facing a mortgage crisis. We are talking serious cash here. Finding an extra £290 or so a month can mean cutting back on literally everything else – with all the negative consequences for residents’ well-being and on the rest of the economy. And in the worst cases, families will lose their homes. The time for action is now.
“Liz Truss crashed the economy, but Sunak hasn’t fixed it. The truth is that the West of England region is buckling under 13 years of economic mismanagement under successive Tory PMs. And once again it’s West families who are asked to foot the bill.”
Moneyfacts data now suggests the typical rate on a two-year fixed-rate loan has increased to almost 6%, almost double a year ago.