Families face eye-watering mortgage hikes of £6,700 a year as a result of the Tories crashing the economy, new analysis reveals.
Interest rates have soared after the government attempted to slash taxes for the richest in the disastrous mini-Budget.
Labour ’s Rachel Reeves last night warned the Tories are “turning people’s dreams into nightmares” as they struggle to hold on to their homes.
The cost of a two-year fixed-rate mortgage has rocketed to 6.48%, compared to just 1.6% last autumn.
At that price, those who borrow about £200,000 will spend £6,698 more a year than they would have done in September last year.
The Bank of England is poised to unveil the biggest hike in interest rates for 33 years this week as it battles to control inflation.
Most economists think that the Monetary Policy Committee (MPC) is likely to raise interest rates by 0.75 percentage points to 3% at the meeting on Thursday.
It will be the eighth consecutive jump in interest rates by the Bank but will represent the biggest increase since 1989.
It is estimated 1.8 million people will have to re-mortgage in 2023, meaning they will be stung by the higher interest rates.
Shadow chancellor Miss Reeves last night said: “The Conservatives crashed the economy and mortgage rates were pushed sky high as a result.
“Next month’s mortgage costs are eye-wateringly more expensive for so many hardworking families, leaving them worried sick and cutting back. The Tories’ choices are devastating family finances, risking repossessions, and turning people’s dreams into nightmares.
“This is a Conservative crisis made in Downing Street. The latest Prime Minister offers nothing more than a record of economic failure and a habit of making working people pay. Only Labour can provide the strong, stable economy that people need.”
Property website Zoopla last night revealed that demand for new homes from first-time buyers has dropped by a third since the mini-Budget.
Even if mortgage rates ease slightly, it warned that “rates of 4% to 5% are likely to be the new norm", with a negative impact on house values.
Zoopla executive director Richard Donnell said: “The most likely outcome for 2023 is that we see a fall in mortgage rates towards 4% with a modest decline in house prices of up to 5%.”
