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Chancellor Jeremy Hunt meets with banks to discuss mortgage support

Nick Cheek
Written By:
Nick Cheek
Posted:
Updated:
23/06/2023

Chancellor Jeremy Hunt (pictured) has met with the chief executives of major banks today to discuss what further support can be offered to struggling mortgage borrowers.

Media reports suggest that Nikhil Rathi, chief executive of the Financial Conduct Authority, along with Lloyds Banking Group’s Charlie Nunn, Nationwide CEO Debbie Crosbie, NatWest CEO Alison Rose, Virgin Money’s David Duffy and Santander’s Mike Regnier were among those attending the meeting.

A spokesperson said that the Chancellor would make an announcement about outcomes later today.

It comes after the Chancellor confirmed earlier this week that he would meet with mortgage lenders to see what further support they could offer to households, but both he and the Prime Minister Rishi Sunak have ruled out offering Government support.

Hunt said that schemes, like offering mortgage interest relief at source, would involve injecting large amounts of cash which could then fuel further inflation.

Inflation figures this week show that inflation has stayed static at 8.7% which led to the Bank of England increasing the base rate to 5%.

Professionals in the financial and property markets said borrowers should prepare for future rate hikes, with some suggesting that interest rates could hit 6% in the coming months.

Mortgage pricing has also been volatile in recent weeks partially due to sticky inflation figures, leading to swap rates to rise which could in turn place more financial pressure on borrowers.

Mortgage rates continue to rise

The latest Moneyfacts figures show that the average two-year fixed rate stood at 6.19%, which is up from 3.25% in the same period last year, and the average five-year fixed rate has climbed from 3.37% in June last year to 5.83% currently.

The average standard variable rate mortgage has increased from 4.91% in June last year to 7.52% currently.

Lib Dems call on Chancellor to reverse bank tax cuts

The Liberal Democrats have called on the Chancellor to reverse the £3bn of tax cuts it gave to banks this year, arguing that this would be used to assist struggling homeowners.

In the Spring Budget, the Chancellor confirmed that he would reduce the bank surcharge from 8% to 3% from 1 April. This along with cuts to the bank levy means that banks have a total tax giveaway of £3.2bn for 2023 to 2024, according to the Lib Dems.

The political party argues that this could provide temporary support to 1.8 million homeowners on lower incomes suffering from soaring mortgage rates.

Liberal Democrat Treasury spokesperson, Sarah Olney MP, said: “The Conservative Government crashed the economy and sent people’s mortgages spiralling. Homeowners on the brink are now looking for urgent help, not yet more empty words.

“The Chancellor needs to bring forward concrete measures to help people at risk of losing their homes, or else this summit risks being nothing less than a PR gimmick.

“That must start with reversing the massive tax cuts being given to the big banks and using the money raised to help struggling households.

“It beggars belief that the Conservatives are choosing to hand billions of pounds of tax cuts to the banks, while refusing to help families worried sick about keeping a roof over their head.”