‘This crisis was made in Downing Street but is being paid for by working people.’
A young first-time house buyer horrified Question Time audience members and viewers at home with the impact the government’s mini-budget – in a matter of days – has had on her ability to get a mortgage.
On Thursday night’s episode the woman, who has only been identified as Rabia, revealed how the best mortgage offer she could now find was around 10.5 per cent – a rise of six per cent in a week.
The audience member was responding to a question on mortgages on the BBC programme, presented by Fiona Bruce and featuring Minister of State for Local Government, Faith and Communities, Paul Scully.
Rabia told the panel her previous offer of 4.5 percent had been withdrawn.
“I was told my initial interest rate would be 4.5%…now the best offer I can get is about 10.5%”
This #bbcqt audience member says her lender has doubled the interest rate on her prospective mortgage since Friday – pricing her out
Watch on @BBCOne after the 10 o'clock news https://t.co/vDfcZLXbXL
— BBC Question Time (@bbcquestiontime) September 29, 2022
First time buyers are struggling to afford mortgages as lenders withdraw offers, with reports that at least 1,600 products have been withdrawn from the market since last week.
On Wednesday, Martin Lewis fought back tears when he told This Morning that he was worried that the interest rate hike would be “catastrophic”.
Rabia asked the panel: “I want to know what the plan is for mortgages.
“I was told my initial interest rate would be 4.5 per cent. I was told today that the lender has pulled that offer and now the best offer I can get is about 10.5 per cent.”
She went on: “I’m being told, you need to immediately look at putting your application through because if you don’t, the lenders may even pull these offers.”
And concluded: “As a first time buyer I don’t think I can now afford to get a mortgage.”
Her comments were met with audible gasps from the rest of the audience as Fiona Bruce said: “That’s an extraordinary jump.”
Rabia explained that she was given the initial rate about two weeks ago: “We’re in the process of getting all the documentation together, making sure everything is correct, ID and all of those things. Today I was told the lenders are pulling those offers, those offers are no longer there.”
She added: “As a first time buyer, you can imagine, you just can’t do it. From 4.5 percent to 10.5 percent is a drastic increase.”
In reply, government minister Paul Scully said: “A representative from the UK Finance who represents lenders was speaking just yesterday and was saying there are still more mortgage products now than there were 10 years ago, despite the reduction, so there’s still money around.”
However, he did concede it was a tough market: “But you’re right. What you’re finding at the moment… about the constraints.
“If you go back two and a half years to the beginning of covid, the first few weeks of lockdown, lots of businesses were scrambling around with furlough… those first few weeks were really, really, difficult.”
When Bruce pointed out that turmoil was caused by a pandemic, not a government, Scully added: “It’s the uncertainty. We talked a lot earlier on about how the markets are trying to get through this and work out what’s happening.
“The certainty we want to give is first of all by communicating far better.’
Labour MP and shadow Education Minister Bridget Phillipson scolded Scully, saying: ‘The answer is not to tell Rabia she’s basically wrong.’ T
he minister at the Department for Levelling Up, Housing and Communities responded: “I’m trying to make sure that we settle down the lending market so that she can get a better deal.
“I can’t go into her individual circumstances clearly.”
Rabia said, “I know I’m not getting a better deal” and explained that she was given four different offers, with four different rates, all of which are now unavailable. The mini-budget
‘In terms of more offers being valid, I was given four different offers with four different interest rates, none of them are now available.’ She added the mini budget, which saw Chancellor Kwasi Kwarteng announce the biggest tax cuts in 50 years, had had a “big impact” on her life.
Labour has since called for urgent action to help people like Rabia, with Sir Keir Starmer saying the government is “clobbering” people in her position.
“This crisis was made in Downing Street but it’s being paid for by working people,” he tweeted.
The government’s economic chaos is already clobbering those like Rabia who're trying to get a mortgage or to re-mortgage.
This crisis was made in Downing Street but it’s being paid for by working people.
The Tories must get back to Parliament and reverse their kamikaze budget. https://t.co/bw8B2TOUgl
— Keir Starmer (@Keir_Starmer) September 30, 2022
"6% interest rates'd be nothing they used to be 14%!" True. Yet the worry'd be the relative change – people coming off fixes could face new rates 7X higher
House price inflation & policy pushes from all parties to home ownership, mean far higher mortgage debts related to income.
— Martin Lewis (@MartinSLewis) September 29, 2022
North Wales estate agent Ian Wyn-Jones has said that house sales are already collapsing because lenders are pulling their mortgage deals with rates predicted to rise.
According to MailOnline, Wyn-Jones said: ‘People want to put their houses up for sale because they literally can’t afford the mortgages. It’s a horrible situation.
“In the coming weeks we have people coming on because they want to sell now because their mortgage rate has changed and they want to get out.”
The Question Time exchange came after a turbulent week for UK markets which has seen the Bank of England take emergency measures to stabilise the economy amid fears over pension products going bust. It was earlier reported, by Bloomberg, that the UK’s stock and bond markets had lost at least $500 billion in combined value since Liz Truss took over as prime minister.
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