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Hunt to urge banks to aid mortgage borrowers amid crisis

The chancellor will urge the UK’s largest banks to do all they can to support those struggling to pay their mortgage during the cost-of-living crisis when he holds his first talks with chief executives on Wednesday.

Jeremy Hunt will host a roundtable with heads of major mortgage lenders, including Debbie Crosbie of Nationwide, HSBC UK’s Ian Stuart and NatWest’s Alison Rose to discuss the impact of rising interest rates and living costs on customers.

The consumer champion Martin Lewis has also been invited to No 11 after warning that rising energy bills, inflation and interest rates could result in a “perfect storm” for homeowners in the spring.

Richard Lloyd, the interim chair of the Financial Conduct Authority (FCA), which regulates and supervises mortgage lending, will also be attending alongside bosses from Lloyds, Santander UK and Barclays.

The chancellor is expected to tell lenders they should do everything they can to support borrowers, including through interest-only payments that could temporarily reduce their monthly bills during the economic downturn.

Homeowners have been hit with higher mortgage payments due to the disastrous mini-budget in September, which spooked financial markets and pushed up borrowing costs. It increased payments for borrowers on variable-rate mortgages and those that have had to remortgage at higher rates.

While borrowing rates have eased since then, average five-year fixed mortgage deals are still hovering at about 5%, putting further strain on households already facing soaring energy and food bills that have pushed inflation to a 41-year high of 11.1%.

Banking executives are expected to come armed with data outlining the health of their mortgage lending books as Britain braces for the longest recession in a century.

Most lenders are already contacting customers that might be at risk of falling behind on payments. Still, some say they have been cautious about the kind of help they might provide vulnerable customers due to a lack of guidance from the regulator.

While the FCA instructed lenders to be flexible during the Covid crisis by providing payment holidays and interest-only arrangements, it has been less prescriptive on the kind of support that should be provided during the cost-of-living crisis.

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