FactCheck: mortgages under Labour
Updated on 24 September 2007
Have more people become homeowners under Labour? And are they getting a better deal? FactCheck investigates.
The claim
"It is possible for more and more people, nearly two million more people, to become homeowners under a Labour government ... the average share of income being paid on mortgages in many cases is half what it was in the early 1990s."
Gordon Brown, Andrew Marr Show, BBC One, 23 September 2007
The background
On the first day of Labour's annual conference, Andrew Marr questioned the prime minister on the estimated £1.4 trillion of personal debt in the country - something to which the Conservatives have drawn attention.
Brown, however, reckons that much of this is due to the increase in the number of people with mortgages.
Despite the recent rise in house prices, home ownership is something the Government encourages. The Labour party promised in its 2005 election manifesto to increase the number of homeowners in Britain by a million by 2010.
Has the prudent prime minister got his facts right?
The analysis
According to the latest government figures, in 1997, when Labour came to power, 16,675,000 homes were occupied by their owners. In 2006, there were 18,522,000 - an increase of 1,847,000.
This is the nearly two million that Brown mentions. The figure sounds impressive - but how does it compare with the longer-term picture?
In 1987 there were 14,363,000 owner-occupied homes. By 1996, the number had increased to 16,445,000.
That's an increase of 2,082,000 - which pips the rise under Labour.
Go back a bit further, to the days of right to buy council homes under Thatcher, and the number of owner-occupied homes went up by nearly two million between 1981 and 1987 alone.
It's also important to remember that these figures refer to the number of homes, rather than the number of people living in them. Generally, the number of households is increasing, and the number of people per household is dropping.
Owned homes have been growing in comparison to rented sector, however. In general, the number of rented homes has hovered around the eight million mark that Labour inherited from the Tories, dipping as low as 7,699,000 in 2004, but creeping back up to 7,890,000 in 2006.
What about mortgage repayments? With tales of people being offered mega-mortgages and central London shoeboxes selling for telephone number prices, it might seem logical that mortgage payments would take up more and more of our incomes.
In 2006, the average mortgage payment made up around 19.7 per cent of the buyer's income (21.5 per cent for first-time buyers). This is down from a heady peak of 27 per cent in 1990 - though it's still higher than the 17.1 per cent when Labour came to power in 1997.
Perhaps more worryingly, the number of house repossessions has crept up steadily for the past two years. Figures from the Council of Mortgage Lenders showed 6,800 repossessions in 2004, which went up to 10,600 in 2005 and nearly doubled to 19,900 last year. This is down from the 75,540 in 1992, and still a decrease on 32,770 in 1997.
Verdict
It's not that Brown's wrong on the number of homeowners - more that he's describing a prevailing trend and claiming it as a Labour victory. Look at the preceding 10-year period, when Britain was under Tory rule, and there's a slightly bigger increase.
By conjuring up the spectre of Black Wednesday, Brown reminds homeowners that things are far better than during the high-interest rate days of the early nineties.
Fast forward a few years, however, and the situation that Labour inherited doesn't bear such an easy comparison with the picture now.
FactCheck rating: 2
How ratings work
Every time a FactCheck article is published we'll give it a rating from zero to five.
The lower end of the scale indicates that the claim in question largerly checks out, while the upper end of the scale suggests misrepresentation, exaggeration, a massaging of statistics and/or language.
In the unlikely event that we award a 5 out of 5, our factcheckers have concluded that the claim under examination has absolutely no basis in fact.
Sources
The Andrew Marr Show, BBC One
Dwelling stock by tenure
Repayments as a per cent of income and deposits as a per cent of purchase price
Council of Mortgage Lenders
