World Economy

Brexit Could Cause Higher Mortgage Rises

Brexit Could Cause Higher Mortgage Rises Brexit Could Cause Higher Mortgage Rises

The cost of an average mortgage in the UK could rise by nearly £1,000 ($1,451) a year if Britain leaves the European Union, Prime Minister David Cameron has warned.

Uncertainty caused by exiting the EU could tighten credit conditions and push up rates, Remain campaigners say treasury analysis shows.

Leave campaigners called the claims “desperate”, BBC reported.

They also warned voters “cannot trust” the government that the UK will not be pushed into future eurozone bailouts.

Cameron told the Mail on Sunday: “Nearly all experts agree there will be instant shocks to the economy if we leave the EU and there is clear and present danger of higher mortgage rates.”

A referendum on the UK’s membership of the EU will be held on June 23.

Britain Stronger In Europe said treasury analysis suggested voting to leave the EU could add £920 to the annual cost of the average mortgage.

 A Poorer Country?

It said analysis—first revealed earlier in the campaign—had shown mortgage rates could rise by 70 basis points, meaning a mortgage with an interest rate of 1.5% would rise to 2.2%.

Such a rise for an average property costing £292,000 would result in a payment increase of £75 per month, pushing up annual payments by £920 a year.

First time buyers could expect to pay £810 more per year, Remain added, making it harder for people to get on the housing ladder.

In an interview with the Sunday Times, Chancellor of the Exchequer George Osborne also warned: “If we quit the EU the country would be poorer, there would be volatility in the financial markets and that would push up mortgage costs irrespective of what the Bank of England might do with official interest rates.”

There was “a clear consensus” among economists that leaving the EU would result in a rise in mortgage rates, the Remain campaign added.

  Signs of Desperation

However, Matthew Elliott, chief executive of Vote Leave, said it was “desperate stuff for the PM to run down people’s mortgages in his bid to win the referendum”.

He said: “Even the most pro-EU campaigners have admitted the economy will grow after we vote leave so bogeyman claims about mortgages are just the latest act of desperation from the Remain campaign fast losing the plot and public.”

It is not the first time the campaign to remain in the EU has warned about the impact on mortgages in the event of a vote to leave.

Last month, Osborne said leaving the EU would cause an “immediate economic shock” that could hold back growth in house prices.