Consumer champion Martin Lewis says the ‘mortgage timebomb’ he warned about has now exploded. His comment comes as monthly figures for May 2023 show inflation is stuck at 8.7% and core inflation rose to 7.1%, and food price inflation is now 18.4%.

Economists had expected core inflation to fall and this unexpected increase has led to the Bank of England increasing the base rate to 5% on the 22^nd June. There have now been 13 consecutive base rate rises in the past 18 months. There has been an immediate impact on mortgage rates which have already been rising – a two year fixed rate was at 6.19% earlier this week and likely to go up again.

Anyone trying to remortgage their home faces an increase of up to £2,000 a year and products for first time buyers are disappearing.

This in turn affects private sector rents as landlords’ costs increase. Zoopla figures published in June 2023 show that rents have increased by over 10% in the year to April 2023 and now stand at an average of £783 a month in the North West. Private sector renters are now paying 28.3% of their income in rent.

Councillor Elaine Taylor, deputy leader of Oldham Council said “The housing crisis in Oldham shows clearly in the pressure on our Housing Options Service, 626 households needed advice or help in May.

“The caseload has almost doubled in the last two years. The numbers of households, many including children, in temporary accommodation waiting for a home is the highest ever at 410.

“And people are waiting longer as Oldham, like every council, has a desperate shortage of affordable and social homes. Almost 20% are made homeless from the Private Rented Sector and we are also seeing mortgage repossessions.

“The Government has still not outlawed Section 21 no fault evictions. Oldham does not receive any help to build new homes for social rent, right to buy continues to reduce the available stock. And the Local Housing Allowance has been frozen again, meaning housing benefit does not cover the full cost of rents. All in all, it’s a perfect storm even before the huge shock many families will get from mortgage increases.

“It’s worse than a mortgage timebomb. Too many Oldhamers are struggling to keep their home. It’s just not good enough for the Government to shrug their shoulders. Labour’s action plan will force lenders to do more to help mortgage payers cope. Oldham needs a joined up national housing policy and action to help people stay in their homes whether they rent or have a mortgage.”