OPINION - The Standard View: Mortgage pain is set to get a whole lot worse as interest rates rise

·3-min read
 (Christian Adams)
(Christian Adams)

This is going to hurt. Londoners face a mortgage “timebomb” as new research reveals that half a million homeowners in the capital and South-East face an eye-watering £1,800 hike in repayments once their fixed-rate deals lapse.

These warnings come a day before the Bank of England is expected to raise interest rates again, this time possibly by 50 basis points, the single largest jump in 27 years as it seeks to get inflation back under control. Interest rate rises may be necessary to control inflation but they eat away at disposable incomes, sap spending power and threaten to decelerate further an already flagging economy.

The Bank has staked its reputation on getting inflation down — and it is not alone. The European Central Bank raised rates by half a point last month, the US Federal Reserve by three-quarters and the Bank of Canada by a full percentage point. But the end of rock-bottom interest rates is yet another political challenge for whoever wins the Conservative leadership election.

And while many who own a home in London may be “asset rich”, many will be cash poor and deeply impacted by rising energy, fuel and food bills. So beware easy solutions or unsubstantiated boosterism. With the energy price cap set to hit £3,350 in October, the challenge for a prime minister Truss or Sunak will be to keep heads above water going into a difficult winter.

High stakes in Taiwan

In a tinderbox world, the Taiwan Strait — a 110-mile wide channel that separates the People’s Republic of China (PRC) from Taiwan — remains perhaps the most dangerous real estate anywhere.

The PRC views Taiwan as a renegade province. While the United States does not have formal diplomatic relations with the latter, it has robust unofficial ties including a policy of strategic ambiguity over whether it would defend Taiwan from a Chinese invasion.

Tensions grew higher still today after Speaker of the US House of Representatives Nancy Pelosi landed in Taiwan’s capital Taipei as part of a tour of Asian countries. The trip — involving the highest-ranking US official to visit in 25 years — appears to demonstrate a clear re-stating of American support for Taiwan. It is right that the US and its allies stand by Taiwan, a flourishing democracy of 24 million people and a vital economic hub, but Pelosi’s trip is fraught with risk.

It comes at a low point for US-China relations and has already sparked a fierce rhetorical response from the PRC, including preparations for military exercises that will potentially incur into Taiwanese territory.

This is high-stakes diplomacy. The world’s attention has understandably been on Russia’s illegal invasion of Ukraine and the impact that has had on civilians, supply chains and global prices. But today’s events serve as a reminder that Putin is not the only threat in a world with multiple and overlapping fault lines.

Vardy show goes on

Just when you thought the series finale of the Wagatha Christie trial had come and gone, there’s more. Rebekah Vardy has revealed she is in talks with four TV companies about making a documentary about the saga.

We have high hopes for season two, with returning favourites, new faces and plenty more plot twists to enjoy.

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