The Conservatives have thrown first-time buyers “under the bus”
and risk forcing up rents by refusing to abandon their disastrous
mini-Budget, Labour claims today.
New analysis carried out by the party has found that the average
repayments for a first-time buyer with a two-year fixed-rate
mortgage have grown by £580 a month since last year.
Many prospective first-time buyers have had to abandon hopes of
getting on the housing ladder following Kwasi Kwarteng’s
mini-Budget, as mortgage rates have exceeded 6%, meaning
repayments on some two-year fixed-rate deals are reaching over
£1,700 a month.
The difficulties facing young people will only
intensify with the ending of schemes like the mortgage
guarantee scheme, and reported plans to scrap housebuilding
targets, reduce affordable housing requirements and abandon plans
to give more security to private renters.
Shadow Housing Secretary Lisa Nandy today accuses the government
of throwing first-time buyers “under the bus” by refusing to
scrap the mini-Budget which led to the hike in mortgage rates.
She warns of a “double whammy” for young people who will likely
face further increases in rents if, as a result of not being able
to buy, they are forced to continue renting and demand in the
private rented sector is pushed up further. Nandy urges the
Government to work with lenders to avoid a “housing
catastrophe”.
Rents in the UK rose over 12% in the year to August, increasing
by £115 a month to £1,051. London has seen price growth of 18% a
year. Demand for homes to rent privately has exploded
post-pandemic; in the capital the ratio of prospective tenants to
rooms available is 7-to-1.
At Labour’s annual conference last month, set a target for 70%
homeownership. He laid out plans to support first-time
buyers by giving them first dibs on new developments in
their area, introducing a comprehensive mortgage guarantee scheme
and building more affordable housing.
Lisa Nandy also announced plans for a Renters’ Charter to make
renting safe, secure and affordable, and plans to significantly
boost the building of council homes. One million people remain on
social housing waiting lists.
, Labour’s Shadow Levelling
Up, Housing and Communities Secretary,
said:
“The Tories have crashed the economy, leaving millions of working
people to pay the price.
“Not only have first-time buyers been thrown under the bus with
higher mortgage rates, but if they cannot buy and the government
abandons its housebuilding target and affordable housing
commitments, demand and therefore prices will rise in the private
rented sector. It’s a brutal double whammy.
“The Government must work with lenders to avoid a housing
catastrophe. Labour has a comprehensive plan for housing: support
for first-time buyers; a plan to build a new generation of
genuinely affordable social housing; and a new Renters’ Charter
to make renting fairer, more secure and more
affordable.”
Notes to editors
- At Annual Conference last month, Labour announced:
- A state-backed mortgage insurance scheme, with the state
acting as guarantor for prospective homeowners who struggle to
save for a large deposit.
- We will also ensure that first-time buyers can access homes
that are built, by giving them first dibs on new developments
in their area.
- A Renters’ Charter to make renting safe, secure and
affordable. The charter will include: longer-term tenancies as
standard, the right to reasonable alterations, ending Section
21 evictions and introducing a national register of landlords.
We will also introduce a legally binding ‘Decent Homes Standard
2’ updated for the next decade that will apply to all PRS
buildings.
- Significantly boosting the building of council homes,
reforming arcane purchasing rules to rebalance power between
developers and communities and bring in a new generation of
council house building.
- Labour analysis has found that the average repayments for a
first-time buyer with a two-year fixed-rate mortgage have grown
by £580 a month since the summer of last year:
-
Interest
rate on 2 year fix 75% LTV October 2021: 1.29%
- Average FTB house price in 2021
Q3 and 2022 Q2:
- According to industry reports, interest on the
average two year fixed rate mortgage topped 6% in October
2022.
|
|
Average house
price (FTB)
|
Mortgage advance (75%
LTV)
|
Interest rate
|
Term
|
Monthly payments
|
|
2021 Q3
|
224000
|
168000
|
1.29%
|
25
|
£655.44
|
|
2022 Q3 (estimate)
|
256000
|
192000
|
6.00%
|
25
|
£1,237.06
|
|
|
|
|
|
|
|
|
|
|
|
|
INCREASE
|
£581.62
|
- Per month mortgage calculated on Lloyds First Time Buyer
calculator. According to UK Finance has the largest share of the
mortgage market in the UK. Assumes an average housing price of
£270,000 with 5% deposit creating a 2 year fixed rate of £1746 pe
month, on Sunday 9 October 2022: https://www.lloydsbank.com/mortgages/mortgage-calculator.html?MT=FTB
