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London mayor demands mortgage support for homeowners

The Mayor of London, Sadiq Khan, has called for immediate action to protect lower-income homeowners who are increasingly at risk of losing their homes because of rising mortgage costs. New YouGov polling for City Hall reveals that one in four (26 per cent) of Londoners think they will struggle to meet mortgage payments in the next six months.

The Mayor calls for the same level of support seen in the aftermath of the global financial crisis, which avoided the high level of home repossessions seen in the early 1990s crash. Inflation is at a 40-year high, and interest rates are being raised to the highest level for 14 years, meaning urgent action is needed to protect Londoners from potential homelessness.

City Hall analysis of Bank of England data from 2021, the latest available, suggests that more than half of Londoners who had fixed-term mortgages at that time face their deals ending by the end of 2023. This equates to around 400,000 households that could soon be facing dramatically higher mortgage costs due to increased interest rates. The average rate for a two-year fixed-rate deal rose to 6.53 per cent on 18 October 2022, the highest rate since August 2008.

The Resolution Foundation estimates that the impact of rising interest rates will translate into an additional annual cost of £8000 a year by late 2024 across all households in London whose mortgage costs are going up.

The cost-of-living crisis is already fuelling a rise in homelessness in London, with the number of people seen sleeping rough in London increasing by a quarter in the last year. More than half of the people spotted sleeping rough were doing so for the first time, amounting to 1,844 people – a rise of 35 per cent in the same period last year.

Sadiq believes this situation is so serious that the Government should now implement measures similar to those put in place following the 2008 financial crisis and at the beginning of the COVID-19 pandemic. As the households affected vary greatly in their circumstances, the Government should: Reverse the cuts to the Support for Mortgage Interest scheme, Reinstate the Mortgage Rescue Scheme in England, which was abolished in 2014 and which is currently only available in Scotland, Reinstate mortgage payment holidays.

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