Mortgage crisis: The full devastating impact of higher interest rates exposed

Labour and the Liberal Democrats have been sticking the knife in against Rishi Sunak’s Tory Government after the Bank of England raised rates to a 15-year high last week.

Analysis by Labour revealed new mortgages cost a typical household £2,000 more per year than in France.

The cost is also around £1,100 higher than in Belgium and Ireland.

The figure is £800 compared to Germany and the Netherlands.

Pat McFadden, Shadow Chief Secretary to the Treasury, said: “The Tory Government’s refusal to step up and offer proper support is forcing families into a far worse financial situation than in neighbouring countries.”

New mortgages in the UK stood at 4.46 per cent in April, the Bank of England has said.

Data compiled by the European Central Bank has revealed interest rates were on average 2.91 per cent in France and 3.89 per cent in Germany.

The Liberal Democrats, who are calling for a mortgage protection fund to support homeowners, also warned typical mortgages cost the equivalent of a six pence increase in income tax.

The party estimated that there would be an increase in payments of £301 for a family who took out a mortgage of £145,000 in 2021.

Such an increase is roughly the same as how much the household would pay if the basic rate of income tax soared from 20 per cent to 26 per cent.

Liberal Democrat leader Sir Ed Davey said: “This is a Conservative mortgage tax on millions of families.

“People are seeing their monthly mortgage payments go through the roof, all because the Conservatives lost control of inflation and the economy.

“While the banks need to step up and help, there isn’t a moment to lose for Rishi Sunak to guarantee help for homeowners facing repossession with a targeted Mortgage Rescue Fund.

“Every day that goes past means more families are at risk of losing their homes through no fault of their own.”

The Conservative Party’s two main challengers in England released the data weeks before several key by-elections.

Rishi Sunak will need to defend historically true blue Conservative seats such as Uxbridge & South Ruislip and Selby & Ainsty after ex-Prime Minister Boris Johnson and his close ally Nigel Adams resigned ahead of the the release of the privileges committee’s Partygate probe.

David Warburton also quit as the MP for Somerton & Frome, a seat the Liberal Democrats hope to gain, amid allegations of harassment and drug-taking.

A fourth by-election in Mid Bedfordshire is expected later this year after former Culture Secretary Nadine Dorries announced she would resign.

The once-safe Conservative constituencies all have a large number of mortgage-holders, with Mid Bedfordshire having the third highest proportion at 41.5 per cent.

Selby & Ainsty is not far behind on 37 per cent, The Sun on Sunday has revealed.

Despite increasing pessimism about whether the Tory Party can retain the key seats, Sunak remains steadfast in his pledge to halve inflation by the end of the year.

He said: “I want people to be reassured that we've got to hold our nerve, stick to the plan and we will get through this.”

Chancellor Jeremy Hunt echoed the Prime Minister in an article for The Mail on Sunday, claiming: “There is no alternative.”