More than five million households could see their annual mortgage payments rise by an average of £5,100 between now and the end of 2024, a leading think tank has warned.
In total, mortgage payments are set to rise annually by £26bn over the next two years, according to the Resolution Foundation.
Affected households in London will see the biggest increase, with average payments projected to rise by £8,000 over this period – more than twice the level of the £3,400 increase experienced by households in Wales.
The impact in London will be concentrated, however, as less than a fifth (19%) of households there have a mortgage.
“Households across Britain are currently living through an inflation-driven cost-of-living crisis as pay packets shrink and energy bills rise,” said Lindsay Judge, research director at the Resolution Foundation.
“With almost half of all mortgagor households on course to see their family budgets fall by at least 5% from higher payments, the living standards pain from rising interest rates will be widespread.”
While some homeowners on variable rate deals will see their costs increase immediately, the impact on the majority of mortgaged homeowners, who are on fixed-rate mortgages, will build over the coming years as they move off lower rates on to new deals, the think tank added.
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Mortgages have been one of the many areas thrown into chaos following the government’s mini-budget at the end of September.
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2:05
Mortgage burden to hit 80s levels
Average two-year fixed mortgage rate now at highest level since 2008
Lenders have gradually been bringing back new deals, but have increased their rates in doing so, with the average two and five-year fixed mortgage rates at their highest levels since 2008, standing at 6.47% and 6.29% respectively.
On Friday, 3,112 mortgage products were on the market, compared with 3,961 on the day of the mini-budget, according to Moneyfacts.co.uk.
The Resolution Foundation explained that by early 2025, half of all mortgaged households will have seen higher mortgage costs absorb at least 5% of their net income, according to its current projections.
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21:40
Mortgages: Your questions answered
Higher interest rates will create ‘winners’ and ‘losers’
Higher income households will face the biggest increases in mortgage costs in cash terms on average, it added, but warned that lower income families will face the biggest rise as a share of their income.
Some households may be able to avoid higher costs by using savings to reduce their mortgage balance, or by downsizing to a less expensive home.
The think tank also noted that a period of higher interest rates will create “winners” and “losers”, with some people able to benefit from the increased rates, such as retired savers or those who are saving up to buy their first home.
“Regardless of how the future unfolds, it is fair to assume that higher interest rates will cause not only (often serious) problems for a very large number of households, but have significant political ramifications as well,” the foundation stated.
The UK is on a “slippery slope towards death on demand”, according to the justice secretary ahead of a historic Commons vote on assisted dying.
In a letter to her constituents, Shabana Mahmood said she was “profoundly concerned” about the legislation.
“Sadly, recent scandals – such as Hillsborough, infected blood and the Post Office Horizon – have reminded us that the state and those acting on its behalf are not always benign,” she wrote.
“I have always held the view that, for this reason, the state should serve a clear role. It should protect and preserve life, not take it away.
“The state should never offer death as a service.”
On 29 November, MPs will be asked to consider whether to legalise assisted dying, through Kim Leadbeater’s Terminally Ill Adults (End of Life) Bill.
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14:46
Minister ‘leans’ to assisted dying bill
Details of the legislation were published last week, including confirmation the medicine that will end a patient’s life will need to be self-administered and people must be terminally ill and expected to die within six months.
Ms Mahmood, however, said “predictions about life expectancy are often inaccurate”.
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“Doctors can only predict a date of death, with any real certainty, in the final days of life,” she said. “The judgment as to who can and cannot be considered for assisted suicide will therefore be subjective and imprecise.”
Under the Labour MP’s proposals, two independent doctors must confirm a patient is eligible for assisted dying and a High Court judge must give their approval.
The bill will also include punishments of up to 14 years in prison for those who break the law, including coercing someone into ending their own life.
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However, Ms Mahmood said she was concerned the legislation could “pressure” some into ending their lives.
“It cannot be overstated what a profound shift in our culture assisted suicide will herald,” she wrote.
“In my view, the greatest risk of all is the pressure the elderly, vulnerable, sick or disabled may place upon themselves.”
Labour MP Kim Leadbeater, who put forward the bill, said some of the points Ms Mahmood raised have been answered “in the the thorough drafting and presentation of the bill”.
“The strict eligibility criteria make it very clear that we are only talking about people who are already dying,” she said.
“That is why the bill is called the ‘Terminally Ill Adults (End of Life) Bill’; its scope cannot be changed and clearly does not include any other group of people.
“The bill would give dying people the autonomy, dignity and choice to shorten their death if they wish.”
In response to concerns Ms Mahmood raised about patients being coerced into choosing assisted death, Ms Leadbeater said she has consulted widely with doctors and judges.
“Those I have spoken to tell me that they are well equipped to ask the right questions to detect coercion and to ascertain a person’s genuine wishes. It is an integral part of their work,” she said.
In an increasingly fractious debate around the topic, multiple Labour MPs have voiced their concerns.
In a letter to ministers on 3 October, the Cabinet Secretary Simon Case confirmed “the Prime Minister has decided to set aside collective responsibility on the merits of this bill” and that the government would “therefore remain neutral on the passage of the Bill and on the matter of assisted dying”.
“Immediate action” is being taken after blueprints of jail layouts were shared online.
The maps detailing the layouts of prisons in England and Wales were leaked on the dark web over the past fortnight, according to The Times.
The detailed information is said to include the locations of cameras and sensors, prompting fears they could be used to smuggle drugs or weapons into prisons or help inmates plan escapes.
Security officials are now working to identify the source of the leak and who might benefit from the details.
The Ministry of Justice did not disclose which prisons were involved in the breach.
A government spokesperson said in a statement: “We are not going to comment on the specific detail of security matters of this kind, but we are aware of a breach of data to the prison estate and, like with all potential breaches, have taken immediate action to ensure prisons remain secure.”
The leak comes amid a chronic prison overcrowding crisis, which has led to early release schemes and the re-categorising of the security risks of some offenders to ease capacity pressures.
The UK will “set out a path” to lift defence spending to 2.5% of national income in the spring, the prime minister has said, finally offering a timeframe for an announcement on the long-awaited hike after mounting criticism.
Sir Keir Starmer gave the date during a phone call with Mark Rutte, the secretary general of NATO, in the wake of threats by Moscow to target UK and US military facilities following a decision by London and Washington to let Ukraine fire their missiles inside Russia.
There was no clarity though on when the 2.5% level will be achieved. The UK says it currently spends around 2.3% of GDP on defence.
A spokeswoman for Downing Street said that the two men “began by discussing the situation in Ukraine and reiterated the importance of putting the country in the strongest possible position going into the winter”.
They also talked about the deployment of thousands of North Korean soldiers to fight alongside Russia.
“The prime minister underscored the need for all NATO countries to step up in support of our collective defence and updated on the government’s progress on the strategic defence review,” the spokeswoman said.
“His government would set out the path to 2.5% in the spring.”
The defence review will also be published in the spring.
While a date for an announcement on 2.5% will be welcomed by the Ministry of Defence, analysts have long warned that such an increase is still well below the amount that is needed to rebuild the armed forces after decades of decline to meet growing global threats from Russia, an increasingly assertive China, North Korea and Iran.
They say the UK needs to be aiming to hit at least 3% – probably higher.
With Donald Trump returning to the White House, there will be significantly more pressure on the UK and other European NATO allies to accelerate increases in defence spending.