Interest rates will compel banks to provide mortgage support, claims Labour

As the Bank of England prepares to hike interest rates once more to levels not seen since before the 2008 financial meltdown, Labour has increased pressure on Rishi Sunak to take action to assist suffering mortgage holders.

According to Labour, the government should compel banks to assist homeowners having trouble making their mortgage payments. To ease the issue, according to Shadow Chancellor Rachel Reeves, borrowers should be permitted to temporarily switch to interest-only payments.

After discussions with the government last year, several lenders are already providing this, but Labour claims it needs to be applied uniformly. It comes before Thursday’s anticipated increase in interest rates. A decision that would cause significant income losses for millions of people in the upcoming months.

People are suffering greatly as a result of the Conservatives’ mortgage penalty, according to Reeves. Labour, in contrast to this administration, will not remain silent as millions of people face a mortgage disaster that was created in Downing Street.

The announcement made by Labour does not equate to a commitment to implement these policies if the party wins the next election. However, it does increase calls for the prime minister to behave similarly, especially before Jeremy Hunt, the chancellor, meets with the major banks on Friday.

Economists and members of the Conservative party are becoming increasingly concerned about the consequences of the “mortgage timebomb”. At 8.7%, according to data released on Wednesday, experts cautioned that growing wages could delay the return of inflation to pre-pandemic levels. In response, banks have increased their mortgage interest rates beyond 6% for the first time since Liz Truss’ disastrous mini-budget last year due to persistently rising inflation.

Conservative MPs are now pleading with government to step in as they worry that sky-high mortgage costs will cost them their seats in the anticipated next-year election.

Sunak stated at prime minister’s questions on Wednesday that lowering inflation—which he has pledged to do by the end of the year—would be the best approach to lower prices for homeowners. According to officials, if they step in to assist mortgage holders, it would lessen the impact of the Bank of England’s decision to raise interest rates in an effort to reduce consumer spending. On Thursday, Sunak will emphasise that he sees reducing inflation as his top goal while speaking to voters at a PM Connect event. “Beating prices has to be the goal,” the prime minister will say, “because if we don’t get a handle on prices now, the effects will be greater and longer-lasting.”

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