'Average' Scot's pocket hit hard by interest rate rises
10 May 2007
The latest interest rate rise will push more Scots towards poverty, according to charity Shelter Scotland, which today released figures showing how the fourth rate rise since last summer will really hit people's pockets.
The latest rate hike to 5.5 per cent - announced today (Thursday) - means mortgage repayments for borrowers not on fixed rate home loans will rise, leaving some homeowners facing a shortfall when it comes to covering the cost of household essentials like food and utilities.
New figures released by Shelter Scotland today show that if a Scot earning an average wage (£21,419) tried to buy an averagely priced house in Scotland (£143,045), they would be left with just £247 a month to live on after paying basic households costs, i.e. mortgage, council tax, and waste and water charges. This means only £247 to pay for essentials like other bills, travel and food.
Archie Stoddart, director of Shelter Scotland, housing and homelessness charity, said: 'These figures give us a powerful indication of the immense pressure the cost of housing is putting on the pockets of people who want to get onto the property ladder.'
'The interest rate rise is another blow to families who already have overstretched their finances to keep a roof over their heads. Our online repossession advice pages have been viewed almost 16,000 times over the past six months. Last year 800 households applied as homeless because of mortgage default - a figure which has been rising year on year (2). This latest rise will mean that even more people risk following them.'
He added: 'For many though, house prices are simply out of their reach. Housing is becoming increasingly unaffordable for ordinary families. We must see a commitment from our newly elected politicians to find ways to give people real choices about how and where they live. Housing is central to our nation's health, wellbeing and economic future.'
Notes to Editors
- In the Shelter Scotland model, the 'average' Scot's mortgage payments are calculated on the 'average' house price of £143,045, and a 100 per cent mortgage rate at 5.9 per cent. We assume they would have to pay out for council tax and waste and water charges, which leaves the remainder for other bills, food and travel.
- In 2005/6, 800 households gave mortgage default as their reason for homelessness. This figure has risen each year for the past three years (2).
- Shelter Scotland, along with other housing organisations, are calling for 30,000 affordable rented homes for Scotland through this year's comprehensive spending review. For more information visit the media room at www.shelter.org.uk/csr_media
- Shelter believes everyone should have a home and helps 170,000 people a year fight for their rights, get back on their feet, and find and keep a home. We also tackle the root causes of Britain's housing crisis by campaigning for new laws, policies and solutions.
- Spokespeople are available for interview, telephone the media office on 0844 515 2442. An ISDN line number is available for broadcast interviews.