Lib Dem leader Ed Davey proposes £300-a-month mortgage grants

People struggling with higher mortgage costs after disastrous Tory mini-budget should get help, he says, just as banks helped in 2008

Homeowners struggling to pay their mortgages in the wake of Liz Truss’s “disastrous budget” should be helped out with grants of up to £300 a month, Lib Dem leader Ed Davey has told the Observer.

In a bid to improve his party’s fortunes in “blue wall” seats where Tory voters have shown a willingness to switch parties, Davey said there was now a “mortgage penalty” on some householders after the mini-budget. He said there are people now “worried sick about how they will get by or even afford to stay in their homes”.

In a speech on the economy on Sunday, he will call for a temporary £3bn mortgage protection fund to help homeowners who have seen a 10% increase in their mortgage repayments. He says it could be paid for by reversing cuts to the bank levy and bank surcharge since 2016.

“The Conservatives have crashed the economy and that’s added hundreds of pounds to millions of people’s monthly mortgage payments,” he said. “Something has to be done, particularly for those who are really struggling or in danger of falling into arrears or even facing repossession.

“The banks should pay their fair share. We bailed them out during the financial crisis, so they should be supporting families who are struggling in this crisis. It seems the right thing to do.”

He insisted that the scheme would be “well targeted” and aimed at the quarter of households struggling the most with costs. He said that while it did not help renters, the Lib Dems already backed a series of measures designed to give them more certainty and power over their home.

The party pointed to figures suggesting that the average two-year fixed rate has risen from 4.24% at the beginning of September to 6.55% now, adding an estimated £1,800 to a typical household’s annual mortgage bill by the end of 2023. About 1.2m households on flexible-rate mortgages have already seen their monthly payments rise, while 1.8m are more on fixed rate deals that will expire in the next year.

“We’re seeing lifelong Conservatives, in all the seats we’re contesting in the blue wall and beyond, saying the Conservatives have just been chaotic,” said Davey. “There’s no doubt that lifelong Tories are really reassessing their votes and a lot of them are coming to us. I do think this is the type of approach that is needed to help those families. Many of them may have voted Tory in the past. Many may vote Liberal Democrat. But this is just the right thing to do.”


Michael Savage Policy editor

The GuardianTramp

Related Content

Article image
UK house buyers ‘left powerless’ as mortgage deals hang in balance
Chancellor’s mini-budget sees home loans withdrawn and purchasers left in limbo

Jess Clark and Jedidajah Otte

02, Oct, 2022 @7:00 AM

Article image
Support for mortgage interest cuts leave homeowners facing hardship

Citizens Advice says a third of homeowners seeking debt advice because of changes to the SMI benefit are vulnerable

Jill Insley

29, Feb, 2012 @8:48 AM

Article image
Thousands of families face ticking time bomb of mortgage rate rises
If interest rates rise, a million households could suddenly find themselves in crushing financial trouble

Daniel Boffey

28, Dec, 2013 @9:00 PM

Article image
Banks urged to warn mortgage borrowers to look at how higher interest rates will affect them
The Bank of England will raise rates soon – and experts want lenders to prepare homeowners for possible financial hardship, reports Phillip Inman

Phillip Inman Economics Correspondent

19, Jul, 2014 @11:06 PM

Article image
Ed Davey rules out a Remain alliance if he becomes Lib Dem leader
Pact would compromise the party and reduce clarity of its message

Toby Helm

08, Jun, 2019 @4:00 PM

Article image
Interest-only mortgages: how to tackle the shortfall
From remortgaging to speaking to your lender, there are a number of ways borrowers can ensure they keep their home

Shane Hickey

19, Mar, 2018 @7:00 AM

Article image
Mortgage benefit cut that means thousands will lose their homes

Many unemployed homeowners face repossession in the new year as the 40% cut in the Support for Mortgage Interest rate begins to bite

Jill Insley

05, Dec, 2010 @12:06 AM

Article image
My ex-husband has landed me with a £9,000 mortgage debt
When we divorced he was awarded the house – he but refused to take me off the title deeds and is now bankrupt

Anna Tims

11, Nov, 2015 @7:00 AM

Article image
Myners urges crackdown on mortgage arrears fees

City minister Lord Myners has encouraged the FSA to pay 'serious attention' to charges levied by lenders on mortgage arrears during its autumn review of the market

Hilary Osborne

07, Jul, 2009 @4:09 PM

Article image
Kwarteng considers extending mortgage guarantee scheme
Initiative may continue beyond December as bank bosses raise concerns over mortgage market

Kalyeena Makortoff and Rupert Jones

06, Oct, 2022 @4:15 PM