Homeowners with mortgages will be among the biggest losers from the cost of living crisis in 2023 due to interest rate rises, while the wealthiest UK households will benefit from better returns on savings and investments, according to analysis by the leading thinktank, the Resolution Foundation.
It said the way the government had tackled the spike in inflation this year – relying heavily on the Bank of England’s interest rate rises – put “mortgage households at the heart of the Britain’s income squeeze”.
The report underscores the dramatic rise in costs facing ordinary families, where 3m households face a £3,000 a year increase in their mortgage costs by the end of the 2023-24 financial year.
A rise in mortgage rates and the broader impact of inflation on food and transport prices will amount to a 12% decline in real incomes for a typical mortgage household between 2021-22 and 2023-24.
Many private renters are also likely to be badly affected by rising interest rates, which are passed on by landlords in the form of higher rents. Rent rises paid to social landlords are capped at 7%.
The more affluent households will makes gains, the thinktank said, as rising interest rates cause an upswing in savings and investment income next year.
“Much of this unearned income surge will be captured by the richest 5% of households, and is significant enough to cause their incomes to rise by 4% this year and next – even while the rest of the country gets poorer,” the report said.
Emily Fry, an author of the report, said: “Britain is set for a £20bn increase in savings income, almost all of which will be captured by the very richest in society."
No comments:
Post a Comment