“£2,900 extra – that’s the cost to the average family of the Tory mortgage penalty”
That was Keir Starmer’s claim in the House of Commons on Wednesday.
Let’s take a look.
That £2,900 figure seems to come from research by the think tank, the Resolution Foundation.
Mortgage rates have been creeping up since December 2021, when the Bank of England – which sets the minimum interest rate for all UK lenders – began raising its base rate to curb inflation.
When that minimum rate rises, the cost of mortgage repayments tends to go up too.
But it’s not entirely correct to say that this £2,900 figure applies to “the average family” with a mortgage.
As the Resolution Foundation makes clear, the estimate relates to the average extra costs that will be borne each year by those who are renewing their mortgages in 2024. People remortgaging in other years would face different costs.
Then there’s the question of who’s to blame.
Hearing Mr Starmer’s words, you’d think that the entire £2,900 average increase in annual mortgage repayments for those renewing next year is down to the Conservatives.
But as FactCheck has previously reported, it’s more complicated than that.
The Bank of England is independent of the government and is tasked with controlling inflation. When inflation is high, the Bank will look to raise its base rate of interest. So, to find out who or what is to blame for high interest rates, it’s often helpful to consider why inflation is so high.
The Bank itself says a key driver of inflation at the moment is a “series of significant shocks” to the UK economy. It cites Russia’s invasion of Ukraine and post-Covid supply chain problems.
These problems were exacerbated by Liz Truss and Kwasi Kwarteng’s ill-fated mini budget last autumn. But that budget was by no means the only reason inflation reached its current levels.
A Labour spokesperson told FactCheck: “It’s ludicrous to suggest that millions of people watching their mortgages rocket up by hundreds of pounds every month is not an economic crisis.
“The Government has overseen 13 years of hollowing out our economic resilience. They have crashed the economy and they have left working people with a bill that will take years to pay off.
“Instead of squabbling over peerages and parties and ruling out any action on mortgages, the Tories should be taking responsibility and acting now.”
Keir Starmer says the “Tory mortgage penalty” for the “average family” is £2,900.
But the stat doesn’t apply to the “average family” with a mortgage as the figure only relates to mortgages coming up for renewal in 2024.
It’s also incorrect to place the entire blame for mortgage rate rises on the Conservatives. Rates are up for a number of reasons – some of them are in the government’s control, others are not.