It was Margaret Thatcher who said that “inflation is the biggest destroyer of all - of industry, of jobs, of savings.” She was right. That’s why the Prime Minister put halving inflation as his priority at the start of the year – along with growing the economy. If inflation is not squeezed out of the system then everyone will become poorer.
The Bank of England like central banks across the world are raising interest rates to combat high inflation – and it is worth noting that rates are higher in the United States, Canada, and New Zealand.
But the combination of high inflation and interest rates means people are facing higher mortgage payments which is causing anxiety. In North West Norfolk, 24 per cent of homes are owned with a mortgage or loan compared to 30 per cent nationally. Those families face higher monthly payments and are having to make difficult choices about their spending, as are people renting.
That’s why it is right that the government is supporting families through a package worth £94 billion – or £3,300 per household on average.
However, it is equally the case that the government should not take action that would add to inflationary pressures – for example by borrowing an extra £28 billion a year as the Labour Party is committed to. Independent experts have said this would increase inflation and interest rates.
Instead, along with the support package, we need to take action to ensure banks and building societies treat people fairly. So I support the new Mortgage Charter the Chancellor has secured. It will help families worried about making monthly mortgage payments by adding an option to switch temporarily to an interest only mortgage or to extend the term to reduce monthly payments. Importantly, people will be able to switch back to their original term within six months.
People who are approaching the end of a fixed rate deal will have the option to lock into a deal up to six months ahead – with the potential to get a better deal right up until their new term starts.
Where people fall behind with mortgage payments it is incredibly worrying for them to think they may lose their home. There are already protections in place to ensure repossession is a last resort. But it is right to strengthen those protections - now there will be a minimum period of a year from the first missed payment before that can happen.
Two weeks ago I was in the Nationwide Building Society in Lynn talking about the cost of living advice they are giving people and the best advice for anyone who is worried is to speak to their lender.
Throughout Covid, the government supported people and with the current higher costs help for the most vulnerable continues. And the additional measures in the Charter will offer better protection for people with their mortgages. That is practical action this government is taking.
Curbing inflation is not easy, but it is vital to relieve pressure on family budgets. The alternative put forward by other parties of more borrowing and spending would simply make the inflation higher – and everyone poorer.
This article first appeared in Lynn News on 30 June.
