Soaring interest rates have taken household wealth down by £2.1trillion over the past year

The Resolution Foundation think tank thinks soaring interest rates have ended the housing boom - the biggest drop in wealth since the Second World War
Mortgage costs soared due to a hike in the Bank of England's base rate in an effort to curb inflation (
Image: PA)

Rising interest rates have caused household wealth to plummet by £2.1 trillion over the past year – the biggest drop since World War II, analysts reveal today.< /p>
Estimates from the Resolution Foundation think tank suggest that total household wealth has fallen to 650% of national income by early 2023. Its latest study, 'Peaked Interest?', warns that if rates remain high , they could lead to a further decline in wealth to around 550% of GDP.

However, higher levels would lower house prices - making them more affordable for first-time buyers - and would make it easier "to achieve a decent standard of living in retirement by increasing rates of return to housing". 'retirement savings'.

Ian Mulheirn, associate researcher at the Resolution Foundation, said: “Over the past four decades, wealth has soared across Britain, even when wages and incomes have stagnated. Rapid interest rates ended this boom and caused the biggest decline in wealth since the war, of £2.1tn.Those with large mortgages will be affected by these major changes.

“But there are also winners from a move to a world of higher rates and lower wealth. Higher returns will make it much easier for young people to save for a pension that offers a decent standard of living in retirement, while lower property prices will make it easier for younger generations to access the property ladder and others looking to trade.
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Politics Jul 17, 2023 0 71 Add to Reading List

Soaring interest rates have taken household wealth down by £2.1trillion over the past year

The Resolution Foundation think tank thinks soaring interest rates have ended the housing boom - the biggest drop in wealth since the Second World War

Mortgage costs soared due to rise in base rate from the Bank of England in an effort to curb inflation

Mortgage costs soared due to a hike in the Bank of England's base rate in an effort to curb inflation (

Image: PA)

Rising interest rates have caused household wealth to plummet by £2.1 trillion over the past year – the biggest drop since World War II, analysts reveal today.< /p>

Estimates from the Resolution Foundation think tank suggest that total household wealth has fallen to 650% of national income by early 2023. Its latest study, 'Peaked Interest?', warns that if rates remain high , they could lead to a further decline in wealth to around 550% of GDP.

However, higher levels would lower house prices - making them more affordable for first-time buyers - and would make it easier "to achieve a decent standard of living in retirement by increasing rates of return to housing". 'retirement savings'.

Ian Mulheirn, associate researcher at the Resolution Foundation, said: “Over the past four decades, wealth has soared across Britain, even when wages and incomes have stagnated. Rapid interest rates ended this boom and caused the biggest decline in wealth since the war, of £2.1tn.Those with large mortgages will be affected by these major changes.

“But there are also winners from a move to a world of higher rates and lower wealth. Higher returns will make it much easier for young people to save for a pension that offers a decent standard of living in retirement, while lower property prices will make it easier for younger generations to access the property ladder and others looking to trade.