Market Analysis

A report released on Thursday revealed that rising mortgage rates in Britain likely pushed around 320,000 people into poverty, nearly 100,000 more than indicated by official statistics.

Although rates have decreased from peaks above 6% for a standard two-year mortgage compared to this time last year, they still remain above 5%, significantly higher than pre-2022 levels when interest rates began to climb sharply.

The report from the Institute for Fiscal Studies, funded by the anti-poverty Joseph Rowntree Foundation, indicated that the increase in borrowing costs has impacted more people than commonly believed due to the limitations of official household income data, which uses a single average interest rate for all households.

"This has caused the headline statistics to understate the number of people in poverty, a situation that is expected to worsen in next year’s data," said Sam Ray-Chaudhuri, a research economist at the IFS.

"Poverty increases have also been understated due to the unequal impact of inflation," he added.

According to the Office for National Statistics, inflation peaked at 14.3% for households in the lowest income decile, compared to 11.3% for those with the highest incomes.

Paraphrasing text from "Reuters" all rights reserved by the original author.