Mortgage rate surge pushed 320,000 into poverty: Report

Although rates have decreased from peaks above 6 per cent for a typical two-year mortgage last year, they remain above 5 per cent.

• EasternEye
• 26 July, 2024

Follow Us

By: EasternEye

Rising mortgage rates in Britain have likely pushed around 320,000 people into poverty, nearly 100,000 more than official statistics suggest, according to a report released on Thursday.

Although rates have decreased from peaks above 6 per cent for a typical two-year mortgage last year, they remain above 5 per cent, significantly higher than before 2022, when interest rates began to rise sharply.

The report by the Institute for Fiscal Studies, funded by the Joseph Rowntree Foundation charity, indicated that the increase in borrowing costs has affected more people than commonly assumed.

This discrepancy arises due to limitations in official household income data, which applies a single average interest rate to all households.

“This has led to the headline statistics understating the number of people in poverty, something set to get worse in next year’s data,” said Sam Ray-Chaudhuri, research economist at the IFS.

“Poverty rises have also been understated due to the unequal impact of inflation,” he added.

Data from the Office for National Statistics showed that inflation peaked at 14.3 per cent for households in the bottom income decile, compared with 11.3% for those on the highest incomes.

(Reuters)