“I can’t think of anything worse for Conservative economic competence than to be responsible for everybody’s mortgage bills going up chaotically thanks to a recklessly-delivered speech,” said Giles Wilkes, a former government adviser who is now a senior fellow at the Institute for Government and partner at Flint Global.
Britain is a nation where land has always mattered. For centuries, only the landowning classes were permitted to vote, and even over recent decades, lawmakers have been careful to heed the old adage that an Englishman’s home is his castle. In the 1950s, Housing Minister Harold Macmillan was catapulted up the Cabinet ranks and into Downing Street on the back of a successful housebuilding program. In the 1980s, Margaret Thatcher reaped the electoral rewards of allowing millions of social housing tenants to buy the homes they were living in.
But prices have spiraled dramatically over the past 20 years, and Brits are now saddled with huge household mortgage debts. According to market data company Statista, the U.K. topped a Europe-wide list of outstanding residential mortgage lending at the end of 2021. And this new generation of homeowners has only ever known the rock-bottom interest rates that were normalized following the 2008 financial crash. For millions of households, the prospect of a sudden hike is daunting.
“[People] care desperately about their houses,” Wilkes said. “The mortgage repossession crisis of the early 1990s stained the Tories for years because that was just brutal, people just not being able to afford the house they actually live in.”
With the Bank of England now all but certain to hike rates dramatically in an effort to tackle rampant inflation, Brits are anxiously checking mortgage agreements and calculating their household exposure. Dire warnings abound of a collapse in house prices; of home repossessions; of deep cuts to household spending triggered by spiraling mortgage bills.
The mortgage market saw hundreds of products withdrawn overnight on Tuesday in the expectation of a rate rise, dramatically lowering the choice of rates for those buying or remortgaging, according to the financial information service Moneyfacts.
