Written question WQ92828
- Asked by
- Siân GwenllianPlaid
- To be answered by
- Cabinet Secretary for Economy, Energy and Welsh Language
- Tabled
- Due
- Answered
- Time to answer
- 8 days
Question
What assessment has the Government made of a) how much of the mortgage payments of people in Arfon and throughout Wales stay within the economy in Wales; b) how much leaves the Welsh economy; and c) the effect of these payments on the Welsh economy?
Answer
Answered by Cabinet Secretary for Economy, Energy and Welsh Language
The Welsh Government has not made an assessment on how much of the people in Arfon or in Wales’s income is spent on rental payments and mortgage payments and the effect these payments have on economic prosperity and tackling poverty.
The Welsh Government is not aware of any data source which quantifies the flow of money in and out of Wales due to mortgage payments. Mortgages are offered to customers across the UK, and therefore the underpinning financial arrangements will be pooled.
More generally and looking at Wales and the whole UK, rising rental and mortgage interest payments will reflect the current restrictive monetary policy stance taken by the Bank of England in order to bring inflation back to the two per cent target. As a result, mortgage rates have increased and that will have a dampening effect on consumer spending in Wales and across the UK. The impact in a given location will depend on the extent to which homes are owned outright, rented or owned with a mortgage. For the rental sector, the higher mortgage costs for owners will tend to be passed on as higher rents.
Average UK household costs, as measured by the Office for National Statistics Household Costs Indices (HCI), increased by 5.0 per cent in the year to December 2023, following a 12.4 per cent increase in 2022. Household costs are up 24.7 per cent since December 2019. Higher mortgage rates have been the main contributor to this recent increase. ONS analysis also shows that households with the largest mortgages were most exposed to this increase in owner-occupiers' housing costs, which most often includes working-age households with children and above-average disposable income. This information is only available for the UK as a whole.
We recognise the impact that higher mortgage repayments may have on households in Wales and last year announced support for homeowners experiencing difficulties as a result of the cost of living crisis and other financial issues. Help to Stay Wales works alongside support offered by mortgage providers through the UK Mortgage Charter for customers who are struggling to afford their mortgage payments.