Homeowners ‘betrayed’ by mini-budget

Bath’s Liberal Democrat MP Wera Hobhouse has said the city’s homeowners have been “betrayed” by the Government’s mini-budget.

She warned that some would face a £2,000 rise in their mortgage bills if interest rates rose as many were predicting.

There are nearly 21,700 mortgage borrowers in Bath, with 26% of the city’s homes owned with a mortgage. Analysis by the Liberal Democrats has suggested these people will be hit by a “monster” mortgage rate rise in the coming months if on a standard variable rate or tracker mortgage.

The Bank of England hiked interest rates by 0.5 percentage points to 2.25% on September

22 – the highest they have been for 14 years. And it said it would “not hesitate” to raise them again if necessary after the pound slumped to a record low against the dollar shortly after Chancellor Kwasi Kwarteng’s statement on September 23.

Some are predicting that the Bank could raise interest rates as high as 5% next year. According to the Liberal Democrats, this would cost the average mortgage borrower on a standard variable rate £2,100 a year. Someone on an average tracker mortgage would see an annual increase of £3,000 under that scenario.

Rises in mortgage payments as high as this would cancel out support the Government is giving households on their energy bills.

Ms Hobhouse, pictured, said: “Local homeowners have been betrayed by an out-of-touch Conservative Government. In her first budget as Prime Minister, Liz Truss has chosen unfunded tax cuts for big banks which have sent the financial markets into turmoil. It is now mortgage payers in Bath who are left to pick up the tab. The country is sick of Conservative governments lurching from one crisis to another.”

She added: “Liz Truss owes local people an apology for this shambolic budget.

“This Government’s experiment has clearly failed, and people in Bath and across the country are paying the price.”

The Government has already made one U-turn on its financial plan, announcing on Monday that it will not scrap the 45p top rate of tax. Mr Kwarteng had said he would remove the higher rate of tax on those earning £150,000 a year or more.

It came after senior backbench Tory MPS criticised the plan, including former cabinet ministers Michael Gove and Grant Shapps.

But when asked on the BBC’S Today Programme whether his fiscal package, including £45bn in unfunded tax cuts, had been an error, Mr Kwarteng said: “I don’t recognise that at all. We were acting at very, very high speed.”

He argued that a lot of the market turmoil was caused by international factors, and he declined the invitation to apologise, saying: “There’s humiliation and contrition and I’m happy to own it.”.

Ms Hobhouse has since called on the Chancellor to resign and the Government to scrap the minibudget.

“Frankly, the Chancellor is simply not up to the job and has shown he is not on the side of local people who are struggling with the cost of living crisis,” she said.

“He should resign and allow a new chancellor to start again.”