Tom Swarbrick caller proposes 'radical' solution to mortgage crisis by 'taking interest rates out entirely'

21 June 2023, 23:22

Caller's 'radical' solution to mortgage crises

By Anna Fox

As 1.4m UK mortgage holders face 20% hit to disposable income from rate hikes, caller Barry is optimistic in his solution to the impending crisis.

Caller Barry began by telling Tom Swarbrick: "Let's be radical, shall we take interest rates out of mortgages entirely?”

Providing a personal anecdote, Barry said: "When I bought my first house when I was 21 in Dublin I gave a 5% deposit.

“My payments were 18% of my previous year's P60, and that was estimated that would be 30 years if I stayed on that salary”.

Continuing, Barry said to Tom: “Now as people progress in their careers their earnings go up, you mentioned earlier that people are probably paying 28% at the moment in terms of rent, that 28% they are currently paying, is in most cases equivalent to what their mortgage is going to be”.

READ MORE: Chancellor says Government will ‘stick to its guns’ as UK inflation stays at 8.7%

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Asserting his point Barry said: "What you do is take interest rates out and you say to people 'ok give us a 5% deposit, 28% of what you have been used to paying, if you get on in your career, and make more money you will own that property in 20 years, if you stay on current wages you will own it in 40 years’.

"If you take interest rates out, you’ve got a level playing field and everybody’s happy”.

Their conversation follows an announcement from Chancellor Jeremy Hunt, who said the Government will "stick to its guns" and insisted patience is needed for the Bank of England rate rises to curb inflation.

READ MORE: Inflation has experienced a rocky road over the last 50 years!

Barry maintained his view telling Tom: “The banks get their money but they don’t have to go through the whole thing of repossession, people don’t become homeless because of spikes in interest rates, it’s logical is it not?”

Tom replied saying: “If I’m honest Barry, I don’t know.

“My assumption is, if it works, it would have been done before.”

The latest annual inflation figures put prices 8.7% higher than a year ago and follow already inflated costs.

Factors including Brexit, the pandemic and the Ukraine war have pushed up prices by a quarter on average compared to 2018.

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