EU referendum: Brexit 'could cause mortgage rises', says Cameron

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Houses in LondonImage source, PA

The cost of an average mortgage in the UK could rise by nearly £1,000 a year if Britain leaves the European Union, PM David Cameron has warned.

Uncertainty caused by exiting the EU could tighten credit conditions and push up rates, Remain campaigners say Treasury analysis shows.

Leave campaigners called the claims "desperate".

They also warned voters "cannot trust" the government that the UK will not be pushed into future eurozone bailouts.

Mr Cameron told the Mail on Sunday: "Nearly all experts agree there will be instant shocks to the economy if we leave the EU and there is clear and present danger of higher mortgage rates."

A referendum on the UK's membership of the EU will be held on 23 June.

Britain Stronger In Europe said Treasury analysis suggested voting to leave the EU could add £920 to the annual cost of the average mortgage.

It said analysis - first revealed earlier in the campaign - had shown mortgage rates could rise by 70 basis points, meaning a mortgage with an interest rate of 1.5% would rise to 2.2%.

Such a rise for an average property costing £292,000 would result in a payment increase of £75 per month, pushing up annual payments by £920 a year.

First time buyers could expect to pay £810 more per year, Remain added, making it harder for people to get on the housing ladder.

In an interview with the Sunday Times, Mr Osborne also warned: "If we quit the EU the country would be poorer, there would be volatility in the financial markets and that would push up mortgage costs irrespective of what the Bank of England might do with official interest rates."

There was "a clear consensus" among economists that leaving the EU would result in a rise in mortgage rates, the Remain campaign added.

'Bogeyman claims'

However, Matthew Elliott, chief executive of Vote Leave, said it was "desperate stuff for the PM to run down people's mortgages in his bid to win the referendum".

He said: "Even the most pro-EU campaigners have admitted the economy will grow after we vote leave so bogeyman claims about mortgages are just the latest act of desperation from the remain campaign fast losing the plot and public."

It is not the first time the campaign to remain in the EU has warned about the impact on mortgages in the event of a vote to leave.

Last month, Mr Osborne said leaving the EU would cause an "immediate economic shock" that could hold back growth in house prices.


By Tom Bateman, BBC political correspondent

The early days of this campaign saw an air war waged between the two sides over the economy, in which the Remain team were more recently declaring victory.

They repeatedly pointed to the majority of economists backing their case and used the rapid-fire line that - on the economy - Leave have "lost the argument".

The claims on mortgage rates rising after Brexit are not new.

Yet the £920 figure - extrapolated from a Treasury document released earlier in the campaign - is a fresh grenade lobbed towards their opponents.

But it appears to have done little to stop Vote Leave returning to fight hard over this crucial campaign ground.

The campaign's claims on Eurozone bailouts and trade deals outside the EU may have been ridiculed by their rivals but they tell us one thing; the shelling over the economy is back on.

Letter to Cameron

Meanwhile, in a letter to Mr Cameron and Mr Osborne, leading Vote Leave campaigners said remaining in the EU would tie Britain's economy to a eurozone "crisis" which was a "danger to Britain".

Justice Secretary Michael Gove, former London Mayor Boris Johnson, and Gisela Stuart, MP for Birmingham Edgbaston, warned the UK would not be protected from future potential bailouts of eurozone countries.

"The eurozone institutions remain broken and have been unable to cope with the euro's crisis," they wrote.

"Despite writing a promise of 'no bail-outs' into the EU Treaties, there have been massive bailouts."

Image source, Getty Images

Remain campaigners dismissed the letter as "reckless nonsense".

A spokesman said: "We have clear guarantees we will not contribute to bailouts and protections against eurozone integration."

The government has previously said a legally binding agreement is in place to protect UK taxpayers' money from future rescue packages for struggling countries.

Jobs claim

On Saturday, Mr Johnson said around 300,000 jobs would be created if Britain leaves the EU.

But Remain campaigner, Labour's Chuka Umunna, said the job claim was "embarrassing".

Former Labour leader Neil Kinnock also called for young people to register to vote in the EU referendum, as a low turnout could lead to Brexit "by default".