Tax cuts are welcome, but will do nothing to address the real problem of ruinous mortgage rates



The energy bill guarantee has its limits: the average household still faces paying 64pc more for gas and electricity than last winter, and many homes will be paying far more than £2,500.

And even if it brings headline inflation down five percentage points or so – as some forecasters have predicted – the price of food, fuel and other essentials are still far higher than they were a year ago.

These helpful measures are all irrelevant in the face of soaring interest rates, which are rising so high and so fast that many will be unable to pay their mortgage. Assuming this week’s 0.5 percentage point rise is passed on directly, the average rate for a typical buyer on a two-year fix will rise from 3.64pc to 4.14pc, according to Hamptons estate agents.

We face more than a year of hell: markets expect the Bank Rate to hit 3.5pc by the end of the year and have forecast that it will peak at 4.5pc in 2023. 

In real world terms, that equals mortgage rates of 6.39pc. Of course, that only affects those forced by circumstances to move or those who need to remortgage, but that number is not insignificant: 1.8 million fixed-term deals are expiring next year. 

Already, more than a fifth of homeowners have looked into changing mortgage deals because they can’t keep up with payments anymore, according to research by iPlace Global, a proptech company. Analysts are concerned that hundreds of thousands will no longer be able to qualify for a competitive remortgage deal and so will be trapped on higher variable rates.

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