Chancellor Jeremy Hunt has ruled out giving direct fiscal support to households as the Leader of the Liberal Democrat’s calls for the Prime Minister to end the “mortgage horror show”.
According to FT.com, instead the Chancellor is expected to work with banks to support customers struggling to meet repayments.
Intervening directly in the mortgage market, according to Treasury sources, would push up government borrowing and increase inflationary pressure. This could cause the Bank of England to put rates up higher.
In an interview with the BBC’s Laura Kuenssberg on Sunday, Hunt said that money to mitigate the impact of steep rises in mortgage rates could not be “magicked from thin air”.
Adding to the stock of government debt, he continued, would create interest rate pressure. He said that the financial markets wanted reassurance about the safety and durability of the economy.
Sunak must listen as rates breach six per cent
Mortgage rates began to climb steeply in April when inflation failed to fall as quickly as expected. The average two-year fixed rate is now 6.01 per cent, the highest it has been since December. The average five-year fixed rate is 5.67 per cent.
Ed Davey, leader of the Liberal Democrats, said the government must intervene. “The time for the government to step in is now, anything else will be a disaster for struggling families worried about losing their homes. This Government is sitting on their hands, giving no help to ordinary working people who suffer. It’s just plain wrong.
“We’re are calling on Rishi Sunak to finally listen to those who need help and immediately end this mortgage horror show with a mortgage protection fund.”
