David Cameron warns of mortgage rise if Britain votes for Brexit

 
Lynsey Barber
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2015 General Election - Housing
The Prime Minister has said mortgages could rise (Source: Getty)

David Cameron has warned that mortgages could rise for millions of homeowners if Britain votes to leave the EU.

The Prime Minister has said average repayments could rise by nearly £1,000 a year because leaving Europe could lead to tighter credit controls as well as pushing up interest rates.

But the claim has been called "desperate" by campaigners who want to leave Europe. "Even the most pro-EU campaigners have admitted the economy will grow after we vote leave so bogeyman claims about mortgages are just the latest act of desperation from the remain campaign fast losing the plot and public," said Vote Leave chief executive Matthew Elliott.

Read more: Why a Brexit shouldn't put you off buying a London home

"Nearly all experts agree there will instant shocks to the economy if we leave the EU and there is a clear and present danger of higher mortgage rates," said Cameron, speaking to the Mail on Sunday.

Analysis by the Treasury cited by the Britain Stronger in Europe group suggests the average mortgage could rise by £920 a year and for first time buyers by £810 per year, making it harder for them to get on the property ladder.

Chancellor George Osborne issued a similar warning last month, saying Brexit would hit the value of people's homes and the cost of mortgages.

Read more: The industries that will - and won't - feel the Brexit hit

However, Tim Worstall of the Adam Smith Institute has said rising interest rates would cool house prices making it easier for people to get on the ladder.

"Buyers are already limited to a certain multiple of their income as the capital amount they can spend on a house," he said. "Mark this down as just another one of the scare stories from the Remain campaign."

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