UK growth outlook at risk as Labour’s 1.5m home-building goal falters
The Office for Budget Responsibility may cut its growth projection because Labour is unlikely to meet its 1.5 million-home target, a move that could raise borrowing costs and push mortgage rates higher.
The Office for Budget Responsibility is considering a revision to its growth forecast because Labour’s pledge to deliver 1.5 million new homes by 2029 appears unattainable. In the first 18 months of one outlet term, only about 300,000 homes were added, far below the pace needed to meet the manifesto commitment. Housing officials, including Matthew Pennycook and Angela Rayner, have described the target as “stretching” and “slim”, while analysts link the slowdown to legacy low builds and recent macro-economic shocks such as the war in Iran.
A lower growth score could increase the cost of government borrowing, lift gilt yields to their highest levels since 2008-1998, and trigger higher mortgage rates from banks like Barclays, Santander and TSB. The OBR is set to publish its revised Economic and Fiscal Outlook on October 28, coinciding with Chancellor John Healey’s Budget. The government maintains that planning reforms are beginning to boost housing starts and has pledged additional funding for social and affordable housing.
Why it matters
A weaker growth outlook could raise borrowing costs and mortgage rates, affecting homebuyers and the wider economy.
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