Why the mortgage crisis is also a political one  

Welcome to Thursday’s Early Edition from i.

In December 2021, the Bank of England unexpectedly moved interest rates for the first time in three years, from 0.1 per cent to 0.25 per cent. Since then, it has increased interest rates 11 more times and next week is poised to do so again, which could bring the borrowing rate up to 4.75 per cent. That would be the highest rate imposed since 2008, but in terms of mortgage stress for homeowners, it could feel like a return to the borrowing miseries of the 80s. “Back in the 80s when your mortgage rate was 13 per cent you were borrowing on average just two times your income … your mortgage costs were similar to what they would be now at around 6 per cent,” one analyst explained to i. The crisis isn’t just causing a massive headache for homeowners, however, it’s also becoming a growing one for Rishi Sunak and his government. We’ll look at what it all means, after the headlines.

Today’s news, and why it matters

 The fathers of two 19-year-old students who were stabbed walking home from a night out have addressed thousands of mourners gathered in Nottingham. “The love that we have out here, I wish we had it everywhere. Look after each other, that’s the big thing,” Dr Sanjoy Kumar, Grace’s father, told those gathered at the vigil. History student Mr Webber, medical student Ms Kumar and school caretaker Ian Coates, 65, all died in the attacks, carried out in the early hours of Tuesday morning.

Human organs could be created from scratch within years and eventually mass-produced after scientists hailed a “watershed moment” in creating synthetic human cells. “This level of accuracy is insane. It’s not something that I expected in my life,” Mark Kotter, who is running the project, told i.

Nadine Dorries is to delay her resignation as an MP until she has seen all correspondence between officials about her ill-fated House of Lords bid. The former Culture Secretary said last week she was resigning “with immediate effect”, but on Wednesday night she said she would not quit until she had received “WhatsApps, text messages, all emails and minutes of meetings” regarding herself from a Subject Access Request.

Ministers have been accused of “dragging their feet” over a suspected Russian intelligence asset living in the UK with his family under the Homes for Ukraine scheme. Senior backbench Tory MP Sir Iain Duncan Smith has called on the Government to confirm whether the Ukrainian businessman is currently under investigation, after i revealed he is living in London.

Boris Johnson has filed another salvo at the Commons Privileges Committee as it prepares to publish its report into his behaviour on Thursday – this time calling on a senior Conservative to resign. The former prime minister claims Sir Bernard Jenkin, a member of the committee, broke Covid rules by going to a drinks party in Parliament.

One of the three British people who died after a fire on a diving boat in Egypt has been named as Christina Quinn, the head of a hospice in Plymouth. The 58-year-old was on a medium-sized scuba diving boat called Hurricane that burst into flames in the Red Sea off the resort town of Marsa Alam on Sunday.

Three key questions on the mortgage crisis:

Just how bad is the crisis? Mortgage rates have been rising dramatically in recent months, with the average two-year fixed-rate mortgage now at 5.9 per cent. In the last week, three more major lenders have withdrawn their mortgage products amid renewed expectations of further interest rate rises, creating chaos for brokers and borrowers. There are now predictions that an increasing number of landlords who own one or two properties will leave the market due to the likelihood of making losses as buy-to-let mortgages also go up. Hopeful first-time buyers have spoken out about being trapped out of the market due to the turmoil, and current homeowners are bracing themselves for higher rates when they come to remortgage. The rate of repossession has also gone up as mortgage rates have increased – more than 1,000 homes were taken into repossession in the first quarter of this year. Figures also show that growing numbers of homeowners behind on payments, with 76,630 in arrears of more than 2.5 per cent between January to March – a jump of 2 per cent. And if interest rates go above five per cent, as many believe will now happen, it’s likely there will also be a drop in the housing market. “We’ve been pretty clear that as soon as mortgage rates go above 5 per cent you start seeing price falls”, Richard Donnell, executive director at Zoopla, told i. If you are personally being affected by the crisis, you can tell us here.

How is it affecting voting intentions? Polling for i shows 44 per cent of mortgage holders would vote Labour if a general election were held tomorrow – up from 33 per cent at the 2019 vote. Mark McInnes, insights adviser at Stonehaven, said that “no party has won a general election in the last 50 years without winning mortgage holders”. Rishi Sunak has also put himself at the heart of the issue, promising to halve inflation by the end of the year, as one of his five key commitments to help repair the British economy. But Andrew Bailey, the Governor of the Bank of England has warned the projected fall in inflation is “taking a lot longer than we expected”. On top of that, Jeremy Hunt has privately ruled out introducing a tailored mortgage relief scheme offering tax breaks or subsidies for households struggling to pay their bills. The Chancellor is understood to believe that any of these policies floated by campaigners or other political parties would make inflation worse by pumping more money into the economy, keeping consumer demand higher than it would otherwise be. As Paul Waugh writes: Just a third of mortgage holders have been hit by higher rates, and many more will get stung over the next year. If there are more “Rishi repossessions”, even more voters may want to evict the PM from No 10.

Could it bring forward a general election? MPs have been speculating that Rishi Sunak may wish to take the country to the ballot box earlier than scheduled amid fears continued high inflation is going to lead to many more mortgage holders facing higher rates. Some backbench MPs believe the Prime Minister would be inclined to call a vote before higher interest rates impact thousands of homeowners due to renew their mortgages, Chloe Chaplain and Paul Waugh reported this week. The PM was generally expected to call the vote in May next year, but now some MPs believe he may use the Conservative conference in October to do so. One former Tory minister said the PM should “should avoid ‘doing a Gordon’ [Brown]” – referring to when the former Labour prime minister Mr Brown waited too long to call an election and was punished as a result. Read the full story here.

Around the world

 At least 79 people have died after a migrant boat carrying hundreds of people sank off the Greek coast in the early hours of Wednesday, officials in the region said and warned the number could climb much higher. The shipwreck is the deadliest off Greece this year, and one of the worst in Europe. More than 100 migrants who were travelling on the boat have been rescued from the water.

A mother who fell victim to an AI deepfake scam has recounted the terrifying moment she thought that her daughter had been kidnapped. Scammers demanded a $1m ransom and pretended they had taken 15-year-old Brie hostage, using an app to emulate her daughter’s voice.

The US scientist who discovered whales could sing, and went onto produce the album Songs of the Humpback Whale in 1970, galvanising a global movement, has died aged 88. Roger Payne made the discovery in 1967 during a research trip to Bermuda. His album remains the best-selling environmental album in history.

A mayor has been labelled the “most hated man in France” after allowing a section of ‘French Stonehenge’ to be destroyed to make way for DIY shop. Olivier Lepick razed a section of the alignments of Carnac in Brittany due to what he described as an “administrative error”.

Going to Hel on bus route 666 has long amused tourists and locals at the Polish seaside resort. But the bus operator has revealed the route will be changed to 669, after Christian groups argued the number was promoting “Satanism”. A group had argued that the 666 bus line undermined the “Christian order of the Polish state” and said the use of the number was “Satanic stupidity”.

 Watch out for…

 The long-awaited report into whether Boris Johnson misled parliament over the Partygate claims. It could also contain more sanctions for the former PM, including suspending his Commons pension. 

 Thoughts for the day

 Covid bereaved families shouldn’t feel guilty, but Boris Johnson really should. Rishi Sunak too should reflect on the sheer cost of his attempted secrecy over the inquiry, says Paul Waugh.

The devastating truth is that the NHS did get £350m extra a week – it just barely made a difference. Whoever wins the next election, more spending won’t be high on the priority list, write Sam Freedman and Rachel Wolf.

Without the jingle of an ice cream van, our summer streets will be a much sadder place. One London council has already banned the vans from some roads and another looks set to follow – these bringers of joy should have a right to roam, argues Clare Finney.

Culture Break

 I read every book on the Women’s Prize 2023 shortlist – here’s my verdict. From Maggie O’Farrell’s The Marriage Portrait to Barbara Kingsolver’s Demon Copperhead, these books are a masterclass in setting, writes Anna Bonet.

The Big Read

 I lost £70,000 because I bought a leasehold flat – everything fell apart. “I’m far from the only leaseholder to have been financially destroyed by this archaic, feudal system of home ownership,” says Hannah Fearn.

Sport

 “Australia can bowl quicker – we’ll just hit them to the boundary quicker”. Harry Brook insists he has “no nerves” as he vows to keep batting aggressively and go full Bazball in the upcoming Ashes series.

Something to brighten your day

 People will always spot me and say: “Isn’t that dangerous? Aren’t you going to slip?” says 26-year-old El Robertson, who hasn’t worn shoes in two years. She tells Eleanor Peake about what she’s learnt after climbing seven mountains and shopping barefoot.