Final dates! Join the tutor2u subject teams in London for a day of exam technique and revision at the cinema. Learn more

In the News

How bad will the looming mortgage crisis be?

Graham Watson

19th June 2023

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.

Graham Watson

Graham Watson has taught Economics for over twenty years. He contributes to tutor2u, reads voraciously and is interested in all aspects of Teaching and Learning.

© 2002-2024 Tutor2u Limited. Company Reg no: 04489574. VAT reg no 816865400.