More long-term fixed rate mortgages could have stopped housing crisis and boosted economy, Ian Blackford claims

The SNP big beast warned action now could protect homeowners from any further financial shocks.

More long-term fixed mortgages could have prevented the housing crisis that has seen prices skyrocket, Ian Blackford has claimed.

The former SNP Westminster leader claiming fixed rates were the norm in Europe, and accused the UK Government of leaving the public “uniquely exposed”.

Admitting the “horse had bolted” on the issue, Mr Blackford claimed inaction was a “disaster”, but by acting now the country could be protected from economic shocks in the future.

Ian Blackford called for more fixed rate mortgages.

Sharing a paper he’s written on the mortgage market with Scotland on Sunday, the Ross, Skye and Lochaber MP said the policy would be essential to an independent Scotland.

He said: “This is pressure being heaped on pressure on ordinary folk.

“You’ve now got the Bank of England signalling that the priority is bringing down inflation.

“The only effective tool they have are interest rates, people are now talking about interest rates going up for a considerable amount of time to come, and goodness knows when the peak will be.

Outgoing SNP Westminster leader Ian Blackford speaks during Prime Minister's Questions in the House of Commons. Picture: House of Commons/PA Wire

“Some say six per cent, some say seven per cent, and the fact is, if interest rates do go up to that level, they’ll likely remain there for a period.

“More and more people are going to get caught in this trap. They are going to be renegotiating their mortgage, facing vastly higher bills.

“We were already looking at zero economic growth, this is going to decrease spending and increase the risk of a recession.”

The former city worker gave the example of Belgium, which has 92.01 per cent of consumers on long-term fixed deals with more than half also on them in Spain and Denmark.

Mr Blackford argued the cost of living crisis was only making the impact of mortgage rises worse, and claimed it was entirely preventable.

He explained: “In the market that is being created, what does it mean for house prices? Because house prices are only going to go one way, and none of this needed to happen.

“This is a failure of policy, because the UK Government should have been sure over the course of the last few years that they were bringing pressure to bear on the mortgage providers to offer long-term mortgages on fixed rates of 25 years, which is the norm right across Europe and In North America.

“We’ve come through Covid, the cost of living crisis, and the increase in energy prices, in some regard as a consequence of the war in Ukraine, but who thinks the war is going to come to an early end? Goodness knows the risk of another shock from the war as we come to Winter again.

“People are already stretched to breaking point, and the UK Government has failed to give effective oversight of the mortgage market.”

In his paper, Mr Blackford argues the benefits include shielding borrowers from interest rate fluctuations, and fostering greater home ownership opportunities by offering more affordable and predictable payments. It comes with market data showing the average fixing period in Britain has gone from about 2.4 years to 3.6 in the past decade.

Demanding a change to the orthodoxy around mortgages, Mr Blackford admitted “the horse had bolted”, but called for action to stop home owners falling prey to future economic shocks.He said: “A lot of the damage has been done.The mortgage providers should have been encouraged to issue long-term bonds that would have taken them away from the need to base mortgages on short term deposits. This could have been fixed. This is not difficult, this is done elsewhere, it’s a failure of policy where the UK is uniquely exposed.

“This is perhaps not the most opportune moment, the horse has bolted, but people have to be given appropriate financial advice.

“I want to ensure when Scotland becomes independent, that is exactly the kind of function of the mortgage market I would expect”.

The MP, who has announced he will stand down at the next election, believes these changes will benefit the economy and aligns with the Scottish Government goals of promoting home ownership, safeguarding consumers, and fostering economic stability.

An HM Treasury spokesperson said: “Longer-term mortgage deals have been on the market across the whole of the United Kingdom for a long time.

“The best thing we can do for borrowers is bear down on inflation and we have a clear plan to halve it this year, then get it back down to 2 per cent.

“Our mortgage charter is already helping people get through this difficult time by giving extra protections against repossessions and making it easier to manage monthly repayments”.