Interest rates – live: Hunt calls in banks over mortgage ticking time bomb

Jeremy Hunt is due to meet with big high street lenders this morning in a bid to tackle the mortgage crisis.

The chancellor and Rishi Sunak, the prime minister, have both ruled out direction government intervention in the market but will urge lenders to do more for their customers.

The meetings come after the Bank of England raised interest rates for the 13th consecutive time to 5 per cent to tame inflation, pilling more misery on mortgage holders.

In a tweet yesterday, Mr Hunt said it would be “self-defeating” to offer short-term mortgage support because it would further rising prices.

Rishi Sunak’s government must take “responsibility” for the country’s current economic woes, a shadow minister has said.

Labour’s shadow business and consumer minister Seema Malhotra said the UK had been “hit harder” than our countries in terms of inflation.

More comments from the Feltham and Heston MP below:

UK consumer confidence improved for the fifth consecutive month despite rising interest rates, according to a poll.

A survey by research group GfK, carried out before yesterday’s hike by the Bank of England, found lower energy prices and a strong labour market were behind the rise.

GfK said on Friday its consumer confidence index, a monthly measure of how people view their personal finances and wider economic prospects, rose three points to minus 24.

The Bank of England has finally taken a decisive, hawkish turn, imposing a shock 0.5 percentage point interest rate rise on Britain’s beleaguered borrowers.

Its previously cautious approach led to City predictions that it would only hike rates by a quarter point.

But the backdrop to the decision has been getting increasingly uncomfortable for governor Andrew Bailey and his rate-setting Monetary Policy Committee (MPC).

It noted that May’s 8.7 per rate of inflation, unchanged from April, was 0.3 per cent higher than its forecast published in May’s inflation report.

Worse still, services inflation rose to 7.4 per cent in the same month, 0.5 percentage points higher it had expected. Then there was “core” inflation, which excludes volatile food, alcohol, tobacco and energy prices. That number, seen as a measure of the underlying inflation in the economy, unexpectedly leapt to 7.1 per cent from 6.8 per cent, its highest for more than three decades.

Harriet Baldwin, Tory chairwoman of the Treasury select committee, said mortgage holders should be shown the same “forbearance” by banks during the current period of rising interest rates as they were during Covid.

Asked whether banks should be instructed by the Financial Conduct Authority or ministers to provide such assistance – as Labour has suggested – the Tory MP said the regulator was being “pretty rigorous” on the issue.

“There is going to be a new consumer duty that is going to apply to banks from next month, which was put into legislation last year, and I think that will again require banks to demonstrate how they are treating their mortgage customers with the right degree of forbearance during this difficult time,” she added.

Ms Baldwin also said she wanted to see the price of goods on shop shelves come down “as fast” as they when they are put up.

She said the UK was “past the worst in term of food prices”, but she had “concern” that “as they fall in the wholesale markets, they are not necessarily passed on very fast to consumers”.

Rishi Sunak will not join his chancellor for talks with banks over the mortgage crisis.

The prime minister is instead meeting troops on Armed Forces Day this morning.

No media have been invited to attend the event and the PM will head back to Downing Street once it’s finished, where he will reporteldly spend the weekend.

Rishi Sunak and Jeremy Hunt appeared to blame some of Britain’s biggest firms for persistent inflation – suggesting they could be profiteering for price hikes imposed on customers, Adam Forrest reports.

Speaking in Kent, the prime minister said the government would make sure supermarkets “they are behaving responsibly and fairly”.

And in a letter to Bank of England governor Andrew Bailey, the chancellor said prices were “indicative of some rebuilding of profit margins”.

Mr Hunt said he was determined to make sure that “falls in input costs are passed onto consumers” and would be talking to regulators about what action could be taken.

The chancellor is to meet senior figures from the Competition and Markets Authority, Ofcom, Ofwat and Ofgem next week to discuss energy and food bills.

Mr Hunt is expected to urge them to make sure that any falls wholesale energy costs are passed on to consumers.

Rishi Sunak appeared to hint that tax cuts in the autumn would not be possible during his event in Kent yesterday – a blow to the Tory right demanding changes at the next Budget, Adam Forrest reports.

The PM said: “It might sound great, ‘Let’s cut your taxes over here, let’s spend some more money over there, let’s do massive pay awards for everyone in the public sector’.

“It might feel great for a day, for a week, for a month … pretty quickly it would turn out to have been a really bad idea.”

Asked if there was now “zero chance” of tax cuts this year, Mr Sunak said halving inflation is the “biggest tax cut we can deliver.”

Bank of England governor Andrew Bailey is coming in for severe criticism from Tory MPs who remain furious that the central bank was too slow to act in tackling inflation crisis, Adam Forrest reports.

Ex-Treasury minister Andrea Leadsom told The Independent that there were “lots of questions” about why Mr Bailey had been so behind the curve. “Too little too late is the reason inflation is now becoming sticky,” she said.

Jacob Rees-Mogg told The Mail that Mr Bailey has been the “chief ostrich” with his head in the sand. Tory MP Christopher Chope told Politics Home that “the blame lies with the governor” and asked: “What credibility has he got?”.

Fellow Tory John Baron, who sits on the Treasury committee, told Channel 4 News the Bank had been “asleep at the wheel” and warned that the 0.5 per cent increase in the base rate “risk of overkill”.

However, Mr Baron also told LBC that removing Mr Bailey now is “not going to do markets any good”.

Chancellor Jeremy Hunt will ask banks if they can do more to support struggling households after a shock interest rate hike deepened the mortgage crisis, Adam Forrest reports.

He is meeting large lenders including HSBC and Santander in Downing Street on Friday morning as the government comes under pressure to relieve the mortgage payment pain.

Rishi Sunak and Mr Hunt have ruled out a direct government intervention, as rates were hiked to 5 per cent as the Bank of England tries to bring down stubbornly high inflation.

Labour has called for banks to be compelled to help struggling mortgage holders in a tougher response, while some backbench Tories have demanded tax relief support for under pressure borrowers.

Instead, Mr Hunt is expected to use the meeting in No 11 to press lenders on whether they are living up to their commitments to offer tailored support to those struggling to pay.

They are expected to discuss if banks could to more to extend mortgage terms, switch people to temporary interest-only deals, and allow repayment holidays.

A Tory source told The Mail that repayment holidays “would be a game changer” for the families struggling meet thousands of pounds in extra costs a year.