The site says that if gilt rates went up by just three-quarters of a per cent, and mortgage rates rose accordingly, higher mortgage rates would cost families an extra £624 next year on a new £118,000 mortgage, or £52-a-month on a repayment mortgage.
Jonathan Moore, easyroomate director, said: “If the wholesale financial market is concerned the hung parliament cannot cut the deficit, and inflation will rise, yields on gilts will rise – pushing up the cost of mortgages. A rise of three quarters of a per cent in gilt yields is a conservative estimate of the impact of the hung parliament.”
This is the equivalent of raising income tax by three points to 23% for someone earning the UK average wage of £25,800.
Between October and the end of April, as the Conservative lead over Labour diminished, gilt yields increased by more than 0.5%.
Research from Citi released in March suggested that gilt yields will have to rise by a further 0.75% to about 4.75% in the wake of a hung parliament – higher if inflation returns as a serious threat. This will mean lenders could raise mortgage rates by 0.75%.
Moore added: “If we don’t deal with the debt crisis we’ll have bigger mortgage bills for families.
“First-time buyers were given a small boost by doubling the stamp duty tax-threshold.
“But the benefit of this could be wiped out by the jump in mortgage rates a hung parliament will bring about.”
Nigel Payne, managing director at Assurant, said: “The Tories should be committed to boosting the housing market because it’s so integral to economic recovery, but they need to do more than just a token stamp duty measure.”
