Chancellor Rachel Reeves has been in China on a trade mission (Image: Getty )
The Chancellor Rachel Reeves' Budget has been branded "disastrous" after research claimed it could add over ￡1,000 to a middle-class family's mortgage.
Fiscal watchdog the Office of Budget Responsibility (OBR) have re-evaluated their forecast for mortgage rates for the first quarter of 2025, increasing their assessment of rates from 3.8% to 3.9%.
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The OBR updated their forecast after assessing Mr Reeves' October Budget taking into account her tax and spending decisions.
According to the Telegraph, for a middle-class family owning an average detached property worth ￡443,974, with a 15% deposit and loan of ￡377,000, the change in rate forecast could mean an extra ￡1,019 a year.
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The analysis is based on five-year fixed repayment mortgage, the most popular type of home buying loan in the UK, according to the Bank of England. If a family renewed this type of mortgage in 2025, the additional cost could be even higher, at ￡3,538.
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Speaking to the news outlet, Shadow Chancellor Mel Stride said the pain in the mortgage market was a direct result of Ms Reeves' "disastrous" Budget.
READ MORE... Rachel Reeves told to stop 'hiding in China' and stop pushing UK back to the 70s
Shadow Chancellor Mel Stride has criticised his opposite number (Image: Ian Vogler )
Mr Stride added: “This latest disturbing analysis once again illustrates that Rachel Reeves’ Budget is completely unfit for purpose.
“Far from promoting growth and higher living standards, her decisions are destroying growth, pushing up inflation and seeing interest rates higher for longer, severely punishing mortgage holders along the way.
“Rather than jetting off to China, the Chancellor should be here to at least start sorting out the mess for which she alone is responsible."
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Speaking during her trade visit to China, Ms Reeves has said she will "take action" to meet her fiscal rules following turbulence on the gilt markets.
Increases in the Government's borrowing costs have sparked concern that the Chancellor will be unable to meet her debt and spending targets, requiring either tax rises or deeper spending cuts when she delivers a fiscal statement at the end of March.
Speaking to reporters in Beijing, where she is seeking to rebuild economic ties with China, the Chancellor declined to give a "running commentary" on the markets but insisted her fiscal rules were "non-negotiable".
She added: "We will take action to ensure that we meet those fiscal rules".
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But Carl Emmerson, deputy director at the Institute for Fiscal Studies, told the Telegraph higher gilt yields “will push up government spending on debt interest” and that the resulting tax rises or spending cuts to cover that “would likely be backloaded”.
A Treasury spokesman said: “Economic stability is the foundation of our Plan for Change.
"The average two-year and five-year fixed mortgage rates are lower now than they were at the election and someone on a ￡215,000 mortgage, with a 29-year term length, is paying ￡40 a month less than they were at the time of the election – or ￡480 a year.”