Calls for a £3bn mortgage protection fund have been branded “terrible economics and bad politics” as lenders continue to raise rates.
Liberal Democrat leader Sir Ed Davey called for the multi-billion pound fund to be set up to offer help to families at risk of losing their homes, as repossession fears spiral.
But Tim Pitt, a partner at Flint Global, described the idea as “terrible economics and bad politics”, according to the Telegraph, as it would work against attempts to lower inflation.
Sir Ed told BBC Radio 4’s Today programme: “We’ve already seen the number of people’s homes being repossessed going up massively – surging by 50 per cent in the latest quarter.
“My worry is that we’re going to see lots of other families losing their homes, and we could be in a spiral of repossessions.”
He continued: “The banks have got to play a bigger role. They need to step in and help people who are in trouble. But just as there was before, there needs to be more protection for those who are really suffering and the government just aren’t doing that.”
He said his proposal was “quite targeted and time-limited” and if people were not supported, the resulting “spiral down” would “hit the whole economy”.
According to the data firm Moneyfacts, the average two year fixed rate deal has risen from 5.34 per cent to 5.92 per cent in the last three weeks.
Atom Bank and Coventry Building Society became the latest lenders to raise mortgage rates today, while HSBC yesterday pushed its own rates for the second time in a week.
The fallout from the Bank of England’s rate rise is continuing to devastate homeowners, in a fresh blow to the housing market.