'Tory mortgage penalty' leaves first time buyers £500 worse off a month

10 April 2023 , 21:30

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First time buyers were hit hard by Tory economic failures, Labour said (Image: Getty Images/iStockphoto)

Tory blundering with the economy has left first time buyers with an extra £500-a-month bill every month, new Labour analysis shows.

New figures show the average two-year fixed-rate mortgage in January last year was £837, but 12 months later this had risen to an eye-watering £1,303 - a £466 increase.

Labour hit out at the Government for landing homebuyers with "unimaginable costs" as a result of last year's disastrous mini-budget.

The average fixed rate shot up from an average of 2.4% to 6% as markets went into meltdown following Liz Truss and Kwasi Kwarteng's disastrous economic policies, the party said.

On a visit to Brighton on Tuesday, Shadow Chancellor Rachel Reeves will say: "The Tory mortgage penalty is devastating family finances, destroying dreams and holding back our economy.

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“There is so much promise and potential in Britain, that we can unlock if we can have a government that will put working people first and get the economy growing."

Labour's Rachel Reeves said the "mortgage penalty" is devastating families (BBC/AFP via Getty Images)

Under a Labour government, she said, a comprehensive mortgage guarantee scheme will be set up and first-time buyers will get 'first dibs' on new developments in their area.

This will prevent homes being sold to foreign investors, Labour says.

Ms Reeves said if she was Chancellor, she would be freezing council tax, using funds from a windfall tax on oil and gas giants.

Last month London Mayor Sadiq Khan said some living in the capital were paying a massive £7,000 more a year due to sky-high house prices.

He said: "Conservatives who backed, defended and celebrated the mini budget, should apologise to Londoners for the huge additional costs being heaped on home-owners as a direct result of Tory economic chaos.”

In January the Office for National Statistics (ONS) warned that more than 1.4 million households in the UK were facing interest rates rise when they renew their fixed rate mortgages this year.

Interest rates spiked following Mr Kwarteng's budget on September 23, which saw the Tories pledge £45 billion in unfunded tax reductions, sending markets into panic.

Dave Burke