Chancellor of the Exchequer Jeremy Hunt said he will meet banks and UK mortgage providers this week to discuss the impact of rising interest rates on homeowners, but pushed back against calls for intervention he said would undermine the government’s top priority to tackle inflation.
(Bloomberg) — Chancellor of the Exchequer Jeremy Hunt said he will meet banks and UK mortgage providers this week to discuss the impact of rising interest rates on homeowners, but pushed back against calls for intervention he said would undermine the government’s top priority to tackle inflation.
Hunt told the House of Commons on Thursday he’ll ask lenders “what help they can give to people struggling to pay more expensive mortgages and what flexibilities might be possible for families in arrears.”
People familiar with the matter said the meeting will take place on Friday morning, and that Hunt and Economic Secretary to the Treasury Andrew Griffith will press lenders on implementing measures agreed in December to ensure that mortgage holders facing difficulty will be offered tailored support.
Prime Minister Rishi Sunak’s government is under growing pressure to help homeowners as the Bank of England raises benchmark borrowing cost to tackle stubbornly high inflation. A key mortgage rate jumped above 6% on Monday, and the Resolution Foundation estimates that people refinancing loans next year will pay an average of £2,900 ($3,700) a year more.
That will severely dent family budgets just as Sunak is gearing up for a general election widely expected next year. It’s also given the main opposition Labour Party — leading Sunak’s Tories by a double-digit margin in national polling — a stick to beat the governing party with.
Shadow Chancellor Rachel Reeves pointed to recent woes faced by the Conservatives and asked Hunt where he thought families would find the money to pay the “Tory mortgage penalty.”
Asked by a member of his own party whether he would consider introducing relief at source on mortgage interest rates — a tax break abolished more than two decades ago — Hunt said that and similar proposals would involve injecting “large amounts of cash into the economy” and would therefore be inflationary.
“We’ll look at doing everything we can to help, but we won’t do things that will prolong the agony people are going through,” Hunt said.
Instead, Hunt is looking to lenders to ease the burden for homeowners. HSBC Holdings Plc, NatWest Group Plc are among the banks invited to the meeting with Hunt on Friday, according to people familiar with the matter.
Hunt acknowledged the “pain” inflation is causing households and listed support that the government has already put in place for some of the worst-off Britons. But he ruled out capping prices on basic foods, saying that would not be the “right long-term solution.”
–With assistance from Philip Aldrick.
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