THOUSANDS FACE £10K MORTGAGE BLOW IN LONDON

WARNING AS PM AND KWASI HOLD OBR TALKS

- David Bond

THOUSANDS of Londoners were warned today they face a major mortgage "shock" with some paying an extra £10,000 a year as the Bank of England raises interest rates to tackle soaring inflation and restore confidence in Britain's economy.

The warning came as Prime Minister Liz Truss and Chancellor Kwasi Kwarteng held emergency talks with independent fiscal watchdog, the Office for Budget Responsibility, in a bid to calm financial markets following last week's mini-budget. Mr Kwarteng's plan to slash taxes by £45 billion and spend a further £60 billion on freezing energy bills led to a surge in the cost of government borrowing, forcing the central bank to prop up pension funds and triggering fears that interest rates could rise higher and faster than expected.

London homeowners could pay £856 extra a month

Amid the volatility, more than 40 per cent of new mortgage products have been withdrawn from the market this week, according to financial website Moneyfacts. As lenders race to re-price deals, housing market experts predict the Bank of England's Monetary Policy Committee could raise rates to six per cent by next spring - pushing borrowing rates to levels not seen for more than two decades.