The government denies mortgage aid, and Jeremy Hunt cites inflation concerns.
The government has rejected the idea of providing significant financial aid to mortgage holders due to concerns that it would contribute to higher living costs. Chancellor Jeremy Hunt stated that implementing mortgage relief schemes would exacerbate inflation instead of improving the situation. However, he plans to meet with mortgage lenders to discuss potential assistance for households struggling with increasing bills.
Homeowners are currently facing soaring mortgage expenses due to elevated interest rates. The government emphasised that it is already allocating record amounts of funds to support individuals and possesses specific tools to offer assistance, including loans for those receiving benefits. A spokesperson highlighted that households have received an average of £3,300 each to alleviate the pressures of living costs.
During a parliamentary session, Conservative MP Sir Jake Berry proposed the reintroduction of a Conservative idea known as mortgage interest relief at source to prevent a potential “mortgage bomb” from occurring. In response, Mr. Hunt expressed his intention to meet with major lenders to explore potential help for individuals struggling with higher mortgage payments and to discuss possible flexibility for families in arrears.
Inflation, currently at a rate of 8.7% as of April, indicates that overall consumer prices are 8.7% higher compared to April of the previous year. To combat inflation, the Bank of England has been gradually increasing interest rates, resulting in more expensive borrowing costs, including mortgages. It is expected that the Bank will further raise rates and maintain them at higher levels for an extended period.
Anticipating the Bank’s decision, mortgage funding costs have already risen, impacting new borrowers and those seeking to remortgage. Lenders have been withdrawing deals and raising rates with little notice, causing the average rate on a two-year fixed mortgage to surpass 6% on Monday.
The “Liberal Democrats” have also advocated for mortgage relief and the establishment of a mortgage protection fund. However, Treasury Minister Andrew Griffith argued that such policies would hinder efforts to reduce inflation.