We are rapidly starting to see what a “mortgage bombshell” might look like. Thousands of Londoners have been warned they could pay more than £10,000 a year extra if interest rates rise to six per cent.
These predictions follow the mini-budget delivered a week ago today, when the Chancellor slashed taxes, precipitating days of market mayhem. Interest rates were already expected to climb to combat inflation, but not necessarily this high or this fast.
Higher rates will impact not only homeowners and first-time buyers but renters in the capital, who have long faced huge rises in the cost of living.
The issue is not simply the cost of a mortgage but its availability too. Amid the turmoil, some of the UK’s biggest lenders felt compelled to pull or re-price their offers to keep up with the expected higher costs of borrowing. Many will have lost out on deals they thought they had, jettisoning the best-laid plans.
Homeowners, like everyone else, were already facing higher costs on everything from food to energy. Some may simply not be able to afford their new overheads and will be forced to sell. Others will have to cut back on discretionary spending, further exacerbating the slowdown in the wider economy. This would be a toxic combination.
The Conservative Party conference, which begins on Sunday, is a timely opportunity for the Prime Minister and the Chancellor to respond to the genuine fears held by Londoners and mortgage holders across the country.
For the vast majority of people their property is their single greatest asset. But it is also their home. In calming the markets, Liz Truss must also seek to reassure ordinary people that she has a credible plan.
Reassurance over rail
When it comes to averting strike action, dialling down the rhetoric is a good place to start. We therefore welcome the tone taken by Anne-Marie Trevelyan.
Speaking to the Evening Standard today, the new Transport Secretary has today offered to “work as a family” with rail unions and train operators to reach a compromise agreement, thereby ending the wave of strikes.
Ms Trevelyan’s language represents a departure from her predecessor, Grant Shapps, whose relationship with Sadiq Khan had been in the deep freeze for years. Indeed, both the Mayor and the RMT union chief Mick Lynch have been impressed by this new approach.
This matters because Londoners need a transport network they can rely on. After months of intermittent strike action across the Tube network and national rail services, including the latest walkout this weekend, we need a long-term solution that serves the best interests of passengers.
Spirit of the Marathon
It is not quite “back to normal”. The London marathon in October still feels strange. But the race returns on Sunday, with 40,000 runners descending on the capital, including one Londoner with an incurable lung condition who will become the first man to run the race with an oxygen tank.
The event has become the largest annual fundraising event on the planet, and is expected to raise another £60m. Best of luck to all the runners, volunteers and supporters.
