Three in four blame Kwasi Kwarteng budget for higher mortgages

New polling commissioned by the Liberal Democrats has revealed three in four (75%) blame the Government’s budget for higher than expected mortgage rates.

The findings reveal even the majority of Conservative voters (68%) blame the expected rise in rates on the Government’s budget last month, which sent the financial markets into turmoil.

The Bank of England is expected to raise interest rates to as much as 6% next year, adding considerable costs to mortgages. This week Moneyfacts reported the typical two year fixed rate mortgage has topped 6% for the first time in 14 years.

Those who own their home with a mortgage also blame the likely rise on rates on the Government’s budget (76%).

Around 2 million people in the UK on a tracker or variable rate mortgage could see their monthly costs rise even further following the budget. According to UK Finance around 1.8 million homeowners will come to the end of their fixed-rate deal in 2023.

The Liberal Democrats have accused Liz Truss and Kwasi Kwarteng of “betraying homeowners” and demanded the Government now step in to help those who cannot afford higher mortgage bills.

Liberal Democrat Treasury spokesperson Sarah Olney MP said:

Struggling families are left to pick up the tab for this Government’s shambolic budget. The Conservative Government is betraying homeowners.

People’s homes are now on the line as a direct result of this Conservative Government’s failed attempt to run the economy.

Liz Truss and Kwasi Kwarteng are forcing struggling families and pensioners to fund tax cuts for big banks and the richest companies. Truss and Kwarteng crashed the markets and sent mortgage bills spiralling, all to pay for their fantasy budget.

It is time the Conservative Government cleaned up their mess. This should start with a new package to help people pay their spiralling mortgage bills. Frankly, I think Liz Truss owes every mortgage owner an apology for adding hundreds if not thousands of pounds to their bills.

Notes

Savanta ComRes interviewed 2,240 UK adults aged 18+ online between 30th September and 2nd October 2022. Data were weighted to be representative of the UK by age, sex, region and social grade.

The Bank of England is predicted to raise interest rates higher than expected in the coming months, which will increase monthly mortgage payments.

Which of the following statements best describes your view?

  • The Government’s budget will be to blame if mortgage bills increase in the coming months: 75%
  • The Government’s budget will not be to blame if mortgage bills increase in the coming months: 16%
  • Don’t know: 9%.

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3 Comments

  • Good sample size, nice to see basis for survey conclusions.

  • If true, this shows 75% of those polled to be uninformed about the realities of inflation. Did they really expect interest rates to remain at rock-bottom with inflation running at 10%? A real rate of -8%? The era of cheap money is over and the inequitable boom in asset prices coming to an end. The Bank of England is well behind the curve in raising base rates – currently the US Fed is 1% higher and rising fast (hence the strength of the dollar). The IMF is now urging central banks to raise rates faster…

    ‘Central banks must ‘aggressively’ raise interest rates to prevent spiralling wages, warns IMF’ [5th. October]:
    https://www.telegraph.co.uk/business/2022/10/05/central-banks-must-aggressively-raise-interest-rates-prevent/

    IMF data stretching back to the 1960s showed periods of soaring prices and wages tended to be short-lived when brought under control by higher interest rates, even if aggressive tightening pushed economies into recession.

    The rise in mortgage rates had little or nothing to do with Kwarteng’s budget. The size of government borrowing, principally for the energy support package, was trailed well in advance. The bond sell off started on the previous afternoon after markets were disappointed by the Bank of England’s decision to raise rates by just 0.5% rather than 0.75% as had been expected. It was a spot of bond vigilantism – a warning shot across the bows of the BoE – to show that inflation needs to be taken more seriously.

  • @Jeff – the challenge, which the BoE (and others) clearly doesn’t get, is that this isn’t traditional ‘inflation’ – it is clear raising the base rate, government massively increasing its borrowing… is just fueling the start of the traditional inflation spiral. Ie. we now have Westminster and BoE induced inflation.

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