By Jessica Frank-Keyes
Chancellor Jeremy Hunt is set to meet with mortgage lenders to discuss support for homeowners as a repayments crisis looms.
Various calls have been made for the government to step in to help struggling borrowers – but Hunt said ministers would not provide financial support which would fuel inflation.
Average costs for a two-year fixed-rate residential mortgage jumped to above six per cent this week, due to the prospect of interest rate rises from the Bank of England (BoE).
The i reported Hunt had summoned major banks for a meeting at the Treasury.
Speaking in the House of Commons at Treasury questions, Hunt said: “We won’t hesitate in our resolve to support the BoE as it seeks to strangle inflation in the economy.
“The best policy is to stick to our plan to halve it. But I also want to make sure we do everything possible to help families paying higher mortgage rates in ways that do not themselves feed inflation.
“So later this week I’ll be meeting the principal mortgage lenders to ask what help they can give to people struggling to pay the more expensive mortgages and what flexibilities might be possible for families in arrears.”
He ruled out mortgage interest relief at source schemes, describing them as “injecting large amounts of cash into the economy, [which] right now would be inflationary.
“So as much as we sympathise with the difficulties and will do everything to help people who are seeing their costs go up, we won’t do anything that would mean we prolonged inflation.”
Consumer champion Martin Lewis previously said he had previously highlighted a “mortgage ticking time bomb”.
And former Tory minister Sir Jake Berry told the Commons: “People are very concerned with what is being described as the mortgage bomb about to go off.”
Speaking on ITV’s Good Morning Britain yesterday, Prime Minister Rishi Sunak said the government’s “first priority” was to halve inflation and it was vital to “stick to the plan”.
He added: “There is also support available for people. We have the mortgage guarantee scheme for first-time buyers and we have the support for mortgage interest scheme as well.”
