A decision by former chancellor Gordon Brown to scrap tax relief on mortgage interest payments will cost households £270 a year, analysis shows. Mortgage interest relief at source (MIRAS) was axed in 2000 due to concerns it had become a middle-class giveaway.

It was introduced under Margaret Thatcher’s administration in 1983 in a bid to boost homeownership.

But Mr Brown scaled down the tax break from 15 percent to 10 percent of interest paid on the first £30,000 of a mortgage before scrapping it altogether.

If MIRAS were still in place at the 15 percent rate, the average household remortgaging now would save £270 a year, according to broker L&C Mortgages.

The analysis comes as the average two-year fixed-rate mortgage on the market topped 6 percent on Monday, according to data from Moneyfactscompare.co.uk

Prime Minister Rishi Sunak has ruled out direct government support for those struggling with mortgage repayments due to interest rates.

Downing Street acknowledged on Monday it was a “concerning time for homeowners, for mortgage holders”, but there was a “raft of support” already available.

But the Prime Minister’s official spokesman said he was not aware of any plans for further interventions despite rising rates, pointing instead to cost-of-living measures already introduced such as help with energy bills.

Joe Stallard, director at House & Holiday Home Mortgages, told Express.co.uk: “Anything that can be done to ultimately prevent repossession of a property is good for lenders, mortgage holders and brokers.

“Anything that can be done to help those in most dire need of support is worthy of exploration.”

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He added: “MIRAS was seen as a middle class tax relief. I’m not necessarily advocating for its return in the form it was in, but something needs to be done to help those most in need. This is the challenge I would put to the Government.”

Mr Stallard warned that “mortgage prisoners”, those who are stuck on their lender’s standard variable rate and unable to switch to cheaper options, will be hit the hardest and face the prospect of having their homes repossessed.

Stephen Millard, Deputy Director for Macroeconomics at the National Institute of Economic and Social Research, warned any help from the Government could further stoke inflation as it would give households more money to spend elsewhere.

He told the Telegraph: “If the Government is giving extra money to people, it will almost always be inflationary, by definition, but what the Government needs to do is ensure that the poorest households can cope with the inflation. Richer households are more able to cope with higher prices.”

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Mr Millard added: “The Government is really in a bind at the moment. The cost-of-living crisis is a real issue precisely because it’s very hard to actually intervene without pushing up on inflation, and in a sense making things worse.”

About 2.4 million fixed-rate mortgages are due to end between now and the end of next year, according to figures from UK Finance.

Many of these homeowners could be in for a bill shock when they come to remortgage, having been used to paying much lower rates.

According to the Resolution Foundation think-tank, annual mortgage repayments are set to rise by £2,900 for the average household remortgaging next year.

The Bank of England is expected to raise the base rate further on Thursday as it grapples with stubbornly high inflation. If this happens, it would push up costs further for some borrowers on variable-rate mortgages.

Samuel Mather-Holgate, an independent financial adviser at Mather and Murray Financial said: “The quickest, easiest and most sensible thing the Government can do is to stop the Bank of England raising interest rates.”

According to Laith Khalaf, Head of Investment Analysis at AJ Bell, the Bank of England is “caught between a rock and a hard place, as it has to choose between pushing more mortgage borrowers towards the brink and letting inflation run riot”.

Speaking to ITV’s Good Morning Britain, Mr Sunak said the most important way to keep costs and interest rates down was to halve inflation.

Mr Sunak also pointed to the support that is already available. He said: “I know the anxiety people will have about the mortgage rates, that is why the first priority I set out at the beginning of the year was to halve inflation because that is the best and most important way that we can keep costs and interest rates down for people.

“We’ve got a clear plan to do that, it is delivering, we need to stick to the plan.”

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