How bad will the looming mortgage crisis be?

Larry Elliott looks at the implications of higher mortgage interest rates both for mortgage borrowers and for the wider macroeconomy. He suggests that with interest rates being so high the implications are such that he thinks it's going to be difficult for the government to retain any economic credibility.

Contrary to what some newspapers trailed over the weekend, and I 'scooped' it seems that the Prime minister has no intention of intervening in the mortgage market and helping households struggling to meet higher borrowing costs. It will be interesting to see how this pans out.

An elementary application of supply - rental properties and owner-occupied housing are substitutes, so if higher mortgage costs are adversely affecting landlords they will be looking to sell properties that were previously rented to avoid paying higher mortgage interest rates.