Household debt costs to double after mortgage bombshell

EMBARGO: Immediate Release

• OBR forecasts household debt servicing costs to double from £73bn to a staggering  £151bn in 2026 - higher than the 2008/2009 crisis

• Typical household to pay £5,350 servicing debts after string of interest rate rises

• Families will be forced to fork out an extra £230 a month, compared to Hunt’s measly £40 a month NICs cut

The Liberal Democrats have uncovered the true cost of mortgage rate rises within the Office for Budget Responsibility's (OBR) Autumn Statement documents. The OBR has forecast total household servicing costs to rise from £73bn in 2023 to a staggering £151bn in 2026. With mortgages the most common source of household debt, the stark new findings show the impact of consecutive Bank of England interest rate rises. The £151bn cost of servicing debts in 2026 is higher than the peak of 2008, when it was £98.3bn. 

Analysis by the Liberal Democrats has revealed the typical household will soon be spending £5,350 per year to service their debts, including mortgages. This equates to £230 extra a month in debt costs, compared to the £40 savings in National Insurance Contributions following the Chancellor’s announcement today. 

Separate figures from the OBR also reveal that families will pay more than double in mortgage interest by the end of 2024 compared to 2022.

The Liberal Democrats have called the figures “a horror show”, revealing Brits will be hit hardest by mortgage rate rises in the years to come with millions of fixed-rate mortgage deals coming to an end. 

Liberal Democrat Treasury Spokesperson Sarah Olney MP said:

“This is a horror show for Brits. There is no end in sight to the mortgage nightmare faced by millions. 

“Not only have household finances been clobbered by a barrage of tax rises, but now they face household debts not seen since the financial crisis. 

“This is the true cost of the Conservative government crashing the economy with their botched budget. The Liz Truss hangover continues to cripple the British economy and people’s wallets. 

“The blunt truth is that any tax cut before the election will be more than cancelled out by the mortgage bombshell.”

ENDS

Notes to Editor

Reported in The Telegraph.

Source: Office for Budget Responsibility, Economic and Fiscal Outlook, Economy supplementary table 1.17 and 1.7 [Link to table]

Debt per household based on latest ONS figure of 28.2m households in 2022 [Link]