Brokers have said most people will be impacted by rising mortgage costs, regardless of their wealth.
It comes after ex-science minister and MP George Freeman was forced to give up his ministerial position due to increased mortgage payments which rose by £1,200 from £800 to £2,000 per month.
“If those at the top are feeling the squeeze, what hope is there for ordinary folks who are barely making ends meet?” Our Mortgage Broker director, Akhi Mair, said.
“It’s a sobering thought that hits close to home for many who are already grappling with the burden of mortgage payments on modest incomes."
He said the situation should serve as a “wake-up call” for government action, calling for policies that prioritise housing affordability for all.
“It’s time for solutions that ensure everyone has a fair shot at owning a home without sacrificing their financial security,” he added.
Living at financial limits
Questions were raised after Freeman’s announcement, with many asking how he could be affected by the increased payments while on a salary of around £118,000 per year.
But some brokers argued this was an example of a common occurrence where people live at financial limits.
Charwin Private Clients director, Ranald Mitchell, said this is a “true testament” showing many people live to their financial limits.
“It’s all relative but the same situation and same life choices, regardless of income.”
Additionally, Orchard Financial Advisers managing director, Ben Parks, explained: “Some may argue the richest in our society will have larger mortgages and therefore face bigger hikes in monthly payments. However, it is all relative.”
Parks pointed out that a £1,200 jump for the ex-minister is a “significant increase”, but in real terms it is no worse than a £200 jump to someone on a very low income.
“While the numbers are different, the anguish is the same,” he said.
A similar sentiment was expressed by Magni Finance director, Ashley Thomas, who said: “Regardless of wealth, the majority of people have been impacted with increased mortgage rates.
“We have seen a number of wealthier customers reduce spending due to increased mortgage costs.”
He said while changes to financial stability do not impact high net worth people as much, they have still been impacted and have had to scale back.
FT Adviser readers warned about the dangers of living at financial limits, acknowledging that circumstances could change.
Alfa Mortgages founder, Adam Smith, pointed out that an individual’s ability to manage increased payments is what their financial dependency is.
“It all comes down to an individual’s personal financial situation, specifically, the number of monthly credit commitments, responsibilities like child maintenance or school fees,” he explained.
“In essence your key consideration is your net disposable monthly income and your ability to absorb rising costs and potential interest rate hikes.”
FT Adviser's editor Simoney Kyriakou speculated on how financial dependencies might have influenced Freeman and his decision to quit his ministerial post.
