Liz Truss taking UK to 'verge of a housing crash' warn SNP

The Royal Institute of Chartered Surveyors (RICS) has said that "storm clouds are visible" - with house prices likely to fall, and mortgage arrears and repossessions likely to increase as the number of people struggling to pay mortgages is forecast to hit a 15-year high.

Since the disastrous mini-budget announcement by Chancellor Kwasi Kwarteng in September, average mortgage rates have risen to a 14-year high.

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The average for a two-year fixed mortgage rate has risen to 6.46% with the five-year rate hitting 6.32% - the highest level since the financial crash of 2008.

RICS chief economist Simon Rubinsohn said although house prices were still rising, "storm clouds" were gathering over both pricing and sales.

He said: "It is difficult not to envisage further pressure on the housing sector as the economy adjusts to higher interest rates and the tight labour market begins to reverse.

"For now, mortgage arrears and possessions remain at historic lows but they are inevitably going to move upwards over the next year, as pressure on homeowners grows.

Mortgage rates rose after the mini-budget announcement

"However, as lenders have been a lot more cautious through this cycle, with high loan-to-value mortgages accounting for a much smaller share of the lending book than in the past, this should help to limit the adverse impact on the market."

The Bank of England forecast 1.7 million mortgage holders in the UK will have to refinance their loans in the next year and face much higher rates.

The central bank warned the number of people struggling to pay their mortgages will rise sharply in 2023 - with around 800,000 households having to spend more than 70% of their take-home pay on mortgage or rent and essentials.

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SNP shadow chancellor Alison Thewliss MP said that the Tories trashed the UK economy with their “disastrous budget”.

She added: "And now Liz Truss is taking the UK to the verge of a housing crash, as mortgage rates rise to unsustainable levels.

"The Prime Minister has created a gathering storm of economic turmoil. She's putting Scottish homeowners and renters under threat - and demonstrating exactly why Scotland needs independence to escape the constant chaos of Westminster control.

"Millions of mortgage holders will be forced to pay thousands of pounds extra in interest as a direct result of Tory incompetence. Most families will be worse off - and there is a danger that some will fall into arrears - and could even see their homes repossessed.

"The UK Government must urgently get a grip of the crisis it has caused.

"As the Tories put our homes, pensions and incomes at risk, it's clear independence is the only way to keep Scotland safe and get rid of Westminster Tory governments for good."

A UK Government spokesperson said: "There are a range of factors affecting mortgage and interest rates, which have been rising internationally in response to global trends including Putin’s illegal invasion of Ukraine.

“The government is doing what it can to support people with rising costs – our Energy Price Guarantee will save the typical household around £1,000 a year and we are providing payments of £1,200 to the eight million most vulnerable families, which includes almost 700,000 across Scotland.

“This support is in addition to the Chancellor’s Growth Plan, which reversed the national insurance rise and will put hundreds of pounds on average back in the pockets of working people in Scotland."