The Mayor of London, Sadiq Khan, is today warning that hundreds of thousands of London homeowners could face a mortgage ‘bomb’ next year, placing further financial
strain on households already struggling to cope with the cost-of-living crisis.
New City Hall analysis reveals the clearest picture yet of the scale of the mortgage crisis in London. Drawing on data from the Financial Conduct Authority, this research reveals that 384,000 London households have been hit by rising mortgage rates since the Government’s mini-Budget was introduced last year, comprising those who are either on variable rate mortgages, or have come off fixed rates since October last year.
According to analysis by the Institute for Fiscal Studies, the additional cost to households in London is around £520 a month – meaning a total ‘mortgage bomb’ hitting London of around £2.4bn a year so far. Alarmingly, an estimated further 209,000 London households could see their mortgage payments rise over the next year as they come off their current fixed rate deals.
This comes as new YouGov polling for City Hall reveals that more than a third (34 per cent) of London’s mortgaged homeowners say they will struggle to meet their payments in the next six months, up from 21 per cent in January.
The Mayor has been clear about the impact of high mortgage rates on lower-income Londoners’ ability to keep up with their mortgage payments and making ends meet, warning Ministers recently that more families would be pushed to the brink of financial devastation. [4] Despite some lenders recently cutting mortgage rates, mortgage pressures remain a huge and growing concern right across the capital.
The Mayor is calling on the Government to urgently step in to ensure that rising mortgage costs don’t result in a wave of repossessions. Sadiq is pressing Ministers to reinstate mortgage payment holidays, reverse cuts to support for mortgage interest through the social security system, and allow owners in significant difficulty to switch their housing tenure to affordable rented or shared equity to allow them to remain in their homes.
The Mayor of London, Sadiq Khan, said: “Many London homeowners already face sizable monthly mortgage payments alongside rising costs and put simply, they are struggling to cope. Hundreds of thousands more London households will see their mortgages skyrocket this year and next, with those on lower incomes at greatest risk of defaulting on their mortgage payments, getting into debt, or losing their homes.
“The Government have so far failed to recognise the scale of the crisis – I’m calling on Ministers to take urgent steps to protect London’s homeowners from the devastating impacts of high mortgage rates.”
Paula Higgins, CEO of HomeOwners Alliance, says: “What is clear is that many households have been worried or are just about coping with soaring mortgage costs, and may have reached the tipping point. Especially for Londoners who already have to deal with high house prices that are no way in line with average wages. And especially for those who have been battered with the relentless cost of living increases.
“Homeowners worried about covering their mortgage costs must not think that they are alone. Their first port of call should be to speak to their lender about options, such as extending the mortgage term to reduce monthly payments, reducing what you pay for a short period, mortgage holidays or changing temporarily to interest-only payments. And for those who are coming off of lower fixed term mortgages, they must not bury their head in the sand. Higher rates will likely stay with us for the foreseeable future. If your current mortgage deal ends in the next six months, then start looking at your remortgage options now.” Photo by MatthiasKabel, Wikimedia commons.