Hung parliament could hit mortgages

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Flatshare website easyroommate.co.uk has claimed that a hung parliament could add £52 a month to the average mortgage, totalling £624 a year.

The claim is that as all long-term lenders price their mortgages with reference to the price of gilts – or units of government debt – mortgage rates are now rising as the cost of gilts rise. Since October, as the Conservative lead over Labour has diminished, gilt yields have increased by over half of one per cent. City research suggests that gilt yields will have to rise by a further 0.75% to about 4.75% in the event of a hung parliament – higher if inflation returns as a serious threat. This will mean lenders could raise mortgage rates by three-quarters of a one per cent.

Jonathan Moore, director of easyroommate.co.uk, said: “Mortgages rates are linked to the wider financial market. If the wholesale financial market is concerned that a hung parliament cannot cut the deficit

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