We need an election without delay

My first job after leaving school was for a building society. After several months on the counter, I was moved to work in the mortgage department supporting borrowers who were unable to pay their bills and were facing repossession.

Throughout the period leading up to the recession of 1990, inflation had risen steadily from 3% to 5% and interest rates rocketed to around 10%. The country went into recession and many people were struggling.

In the last few months, many people who pay a mortgage have seen several increases in their outgoings, to add to the hikes in prices for food, fuel, and other outgoings. On the face of it, with interest rates now much lower than 30 years ago, the situation is not as critical, but this fails to tell the whole story. Back then, people were able to buy a home for three times their salary. They needed a deposit of just 5% which for a first-time buyer would equate to around six months’ salary and as fixed rate mortgages did not arrive until 1989, we would all factor in what payments would be if rates increased knowing it could (and probably would) happen on a regular basis.

If you roll that forward to today in Dorset, the average salary is £34,000 but a typical twobed house somewhere between £250,000 and £350,000. Of new borrowers over the last five years, 96% have taken a fixed rate deal. Even with this cursory look, the numbers no longer add up. One third of the population owns their home outright, and one in six rent from the council or other social landlord. Together that’s nearly half of households. They are completely unaffected by rate rises as are those on fixed rates and those renting from private landlords (though they see the problem looming over the hill as fixed rates end and tenancies are reviewed).