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Monday, March 4, 2024

Shocking Cost of Tory Mortgage Crisis Revealed

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The SNP has said “independence is key to securing prosperity for Scotland” – as new analysis reveals the shocking cost of the Tory mortgage crisis for the 740,000 households with a mortgage in Scotland.

The House of Commons analysis, commissioned by the SNP, found that following the Bank of England’s shock interest rate rise to 5% on 21st June, households with an average £166,431 mortgage in Scotland, getting an average 6.37% two year fixed rate deal, will be paying 52% more each month than they would have paid a year and a half ago in November 2021.

In November 2021, the average two year fixed rate mortgage was 2.29%, which would see such a typical Scottish household paying £729 a month on a 25 year mortgage.

As on 29th June, the average two-year fixed rate was 6.37%, leaving the same household paying £1110 a month – an increase of £381 a month and a whopping £4,572 additional interest a year.

A full time worker in Scotland on the National Living Wage would have to forgo their entire wage for more than a quarter of a year (3.24 months) just to pay the additional mortgage interest.

The UK has higher inflation than the EU, US and any country in the G7.

Last week, Schroders Plc forecast the UK is heading for interest rates of 6.5% by the end of 2023, the highest since 1998, and warned “we anticipate rates at this level will drive the UK economy into a recession”. 

If the average two year fix were to rise accordingly to 7.87%, the same household would be paying £541 more a month (£1270) and £6,492 more a year – an increase of 74% on the average rate in November 2021.

Such an increase would require a full time worker on the National Living Wage to forgo almost five months (4.6) of their annual wage just to pay the additional interest.

It comes amid growing warnings about the impact of Brexit on the economy and UK inflation.

In June, former Bank of England governor Mark Carney warned Brexit is causing “a weaker pound, higher inflation and weaker growth” – with the OBR forecasting a 4% hit to GDP and 15% blow to UK trade intensity.

Commenting, SNP Housing spokesperson Chris Stephens MP said:

“The Tories have trashed the economy and left people struggling to keep a roof over their heads – showing why Scotland needs to escape Westminster control with independence.

“Independence is key to securing prosperity and ensuring the full powers needed to tackle the cost of living and deliver sustained economic growth.

“Scotland simply can’t afford to be trapped under Westminster control. 

“Housing is a fundamental need that no one should have to go without but Westminster is making it impossible for many first time buyers to afford their own home – and it’s putting mortgage holders and renters at risk of losing their homes through no fault of their own.

“The SNP is the only party offering real change with independence – while Sunak and Starmer want to impose Brexit, cuts and the same damaging policies that got the UK into this mess.

“At the next election, voting SNP is the only way to secure independence, tackle the cost of living and get rid of these reckless, unelected Tory governments for good.”

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