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Growth Plan: Mortgage Interest Rates

Volume 737: debated on Tuesday 5 September 2023

3. What recent assessment he has made of the potential impact of the growth plan of 23 September 2022 on mortgage interest rates. (906195)

Over the course of 2022, high inflation from Putin’s illegal invasion of Ukraine saw interest rates increase across most western economies. The path to lower rates is through low inflation, which is why the Prime Minister made halving inflation one of our five priorities for this year. I am pleased that the latest Bank of England forecast shows that we are on track.

Mortgage and associated rental costs are soaring in Putney, Roehampton and Southfields, and the Government like to claim it is all due to global shocks or the war in Ukraine, but the latest Bank of England data from July shows that the cost of lending to buy a home remains higher in the UK than in Germany, Italy or France. Will the Minister finally concede that this difference is because those countries did not have the devastating growth plan or mini-Budget last year, and that it is because of this Government’s wider economic failure that my constituents face these costs?

I am glad that the hon. Lady’s constituents, among many others, will benefit both from our mortgage interest support and from there being almost double the number of mortgage products on the market now than in October 2022. I repeat the comment of my colleague, the Exchequer Secretary to the Treasury: if the hon. Lady is so worried about her constituents, what better way of helping them with the cost of living than to do away with the Mayor’s ULEZ tax?

In the UK, homebuyers are overwhelmingly dependent on short-term fixed rate mortgages of just two, three or five years, which means that in times of rising interest rates, as we have at the moment, they are hard hit by massively increasing mortgage bills. In most other countries, homebuyers have long-term fixed rate mortgages of 10 or 20 years, or of the entire length of the mortgage. Does my hon. Friend agree that the regulators should ensure a level playing field between short-term and long-term mortgages to give homebuyers a free choice of the sort of mortgage they want, so they can choose to have greater protection against rate rises if they want?

My hon. Friend has great knowledge of these matters. It was a privilege to work with him and the sector on how we can offer consumers and homebuyers more choice. That choice includes the opportunity of long-term fixed-rate mortgages, and my officials and I continue to work on how we can reduce frictions and barriers to those mortgages.

It is estimated that 140,000 households will face a rise in their mortgage bills this month. If someone in a random constituency, say Mid Bedfordshire, were to remortgage their house in the next six months, they could pay an average of £300 more per month compared with before the disastrous Tory mini-Budget this time last year. What can the Chancellor and his team do to reassure the country that, if the Conservatives were to win the next election, they would not just mess up the economy all over again?

I am sure the constituents of Mid Bedfordshire will be very pleased to know that more than 90% of mortgage providers have signed up to our mortgage charter, which offers the opportunity for relief, to term-out mortgages and to have interest-free periods, if they face adversity at this time when interest rates are high across the world. What will not help the constituents of Mid Bedfordshire is unfunded spending promises that we know will push up the cost of borrowing and defer the point at which inflation falls.

That is a bit rich from the Government, and it is no answer whatsoever to the people of Mid Bedfordshire who will not be able to afford to pay their bills over the coming months. It is one year ago today that the former Tory Prime Minister took a huge ideological gamble and sabotaged Britain’s economy. They crashed the pound, put pensions in peril and exploded a Tory mortgage bombshell under the homes of millions of working people. Will the Minister take this opportunity to apologise to the British people, on behalf of the Conservative party, for wrecking their hopes and aspirations?

I welcome the hon. Gentleman to his position. He has had a feisty morning reading his Walworth Road brief. Let me offer him the opportunity to correct the record, because Labour has spent the past 12 months talking down our economy but it is now larger than it was when we entered covid and it has recovered and grown faster than the economies of both France and Germany.