Do Britain’s struggling homeowners need a mortgage furlough?

A bailout or furlough of some kind for homeowners would be horribly expensive. But if things get worse, the chancellor’s hand may be forced, writes James Moore

The surge in mortgage rates is set to rip £15.8bn out of British household budgets. That’s a huge chunk of change coming out of the economy. It might help tip it into a recession Hunt hopes to avoid. (PA Archive)

A ghost has taken up residence in the Treasury. It loudly rattles its chain and wails “mortgage furlough, mortgage furlough” every time Jeremy Hunt leaves his office in search of a coffee or a sandwich.

The Resolution Foundation today publishes its updated figures on just how much the mortgage crisis is going to cost Britain’s borrowers. Those figures are truly awful. The average bill for remortgaging comes to £2,900, with the surge in mortgage rates set to rip £15.8bn out of British household budgets. That’s a huge chunk of change coming out of the economy too. It might help tip it into a recession Hunt hopes to avoid.

The reason for the sudden increase is that the City now expects Bank of England base rates to peak at close to six per cent, the highest since the disastrous Liz Truss mini-budget.