The Impact of Labour’s Minimum Wage Plans on Mortgage Holders

As the UK prepares for a potential Labour government, mortgage holders are bracing themselves for the potential impact of the party’s plans to increase the minimum wage. HSBC UK, a leading high street bank, has warned that the Monetary Policy Committee of the Bank of England will keep the base interest rate higher, leading to higher mortgage bills for millions.

A graph illustrating the potential impact of higher interest rates on mortgage holders

Labour’s plans to increase the minimum wage to a ‘genuine living wage’ could lead to a hike in interest rates, making it more expensive for people to borrow money to buy a home. This could have a devastating impact on those who are already struggling to keep up with their mortgage payments.

“Greater in-work security, better pay, and more autonomy in the workplace improve the lives of working people and bring substantial economic benefits.” - Labour Party manifesto

However, it’s not all doom and gloom. The construction industry is expected to experience a post-election boost, with Glenigan forecasting a modest increase in project-starts in the latter half of this year. This could lead to an increase in housing supply, which could help to drive down prices and make it easier for people to get on the property ladder.

A photo of construction workers on a building site

But what does this mean for mortgage holders? In the short term, it’s likely that interest rates will remain high, making it more expensive for people to borrow money. However, in the long term, an increase in housing supply could lead to a decrease in prices, making it easier for people to buy a home.

“There are signs of growth, signalling a gradual recovery. For example, in the private housing sector, we anticipate starts will pick up in the latter half of this year, driven by improved affordability and brighter economic prospects.” - Allan Wilen, Glenigan’s economic director

In addition to the potential impact of Labour’s minimum wage plans, mortgage holders also need to be aware of the rules around renting out their homes on platforms like Airbnb. Some mortgage lenders have specific rules about renting out properties, and failing to comply with these rules could result in penalties or even repossession.

A logo of Airbnb, a popular short-term letting platform

In conclusion, Labour’s minimum wage plans could have a significant impact on mortgage holders, but it’s not all bad news. With a potential boost to the construction industry, the future of the housing market is looking brighter. However, mortgage holders need to be aware of the rules around renting out their homes and the potential impact of higher interest rates on their mortgage payments.