This is a story that’s not being given the prominence in the mainstream media it deserves. In 2022 the UK’s mortgage arrears balance was £13.1 billion. In 2023 it has increased to £16.9 billion, an increase of 29%. The number of people unable to afford to pay their mortgage jumped by 29% last year. The number of buy-to-let landlords unable to pay was also up by 126%. These numbers are about to increase dramatically, as in the next two years many fixed rate mortgages come to an end.
When people cannot pay their mortgages they are likely to lose their homes. When buy to let landlords cannot pay their mortgages they either increase the rent or they are forced to sell their houses and their tenants lose their homes.
In June the Institute for Fiscal Studies reported: “Overall, over 14 million adults aged 20 and over, or over around a third of them, have a mortgage (including just over half of 30 to 50-year olds).” Until recently many of these people were on fixed rate mortgages and therefore shielded from the rate rises being implemented by the Bank of England. In the next few months nearly a quarter of fixed rate mortgages are due to end. With no comparable rates on the market this means that many households will be faced with repayment rates they are not prepared for.
In March 2022, households with a mortgage were spending an average of £670 a month on repayments. The IFS warns: “On average those in mortgage-holding households will pay almost £280 more each month, with 30-39-year olds paying almost £360 more.”
Adults over the age of 60, typically with smaller mortgages, often having bought their homes when property prices were lower, or after years of repaying their loans, would face the smallest hit, at just over £150 a month.
According to research economist Thomas Wernham: “Many families bought homes – often with sizeable mortgages – when interest rates were very low. As people’s fixed-term offers come to an end, they are going to be exposed to much higher interest rates. For many, the increase in monthly repayments is going to come as a serious shock.
“Given the cost of living pressures people are already facing due to high food and energy price inflation, these significant increases in mortgage costs could not come at a worse time.”
According to You Tuber Sasha Yanshin, who analyses financial markets, the vast majority of mortgage holders fixed rates were set when it was 21 times lower than today. Many small landlords are either going to have to sell or increase rents.
The government is celebrating an inflation drop but it’s due to reduced energy prices and the historically high inflation rates a year ago caused by government incompetence. Housing costs and rents are increasing; this is a time bomb ticking inside the capitalist economy.
Experts say the consequences of this will be that house prices will drop, but, if we consider that the super rich have had their wealth increased by 50% by this government, it is likely that houses prices will remain high, as the rich take the opportunity to increase their assets portfolio. At the other end of the scale, many people will be forced to sell their homes at prices that do not even pay off their remaining mortgage. That’s a double whammy as you not only lose your home, you retain much of the debt you took on to get the house in the first place.
Is the government incompetent? No they are helping the people who actually control them, the billionaires! The austerity we’ve been crushed under for 50 years seeks to rob working people to create profit. They now have their sights on working people’s assets and the generational wealth that was won through trade union struggle since World War Two. This could be a transfer of wealth from the poorest to the richest worth trillions.
Thatcher asset stripped our nationalised industries and attacked organised labour to enrich the top 1% and drive down the price of the commodity called labour.
This government has increased the wealth of the top 1% by 50% and they are stealing the assets of working people and lowering the price of labour. This is not an accident, neither is it necessary. It is part of a plan to consolidate their power at the expense of ordinary people like you and me.