UK banks to raise mortgage market fears in Kwarteng meeting
High street bank bosses will tell the chancellor, Kwasi Kwarteng, that they have growing concerns over the state of the UK’s mortgage market when they gather at Number 11 Downing Street on Thursday.
The meeting – which is expected to be attended by chief executives, including Alison Rose of NatWest, Charlie Nunn of Lloyds Banking Group, Mike Regnier at Santander and Robin Bulloch at TSB – comes amid mounting fears about the potential fallout from rapidly rising mortgage rates.
Executives are understood to be planning to raise concerns about rising borrowing costs, which surged last week after the government’s mini-budget sent UK financial markets into meltdown.
There are concerns that rising interest rates – while more lucrative for banks – will make it difficult for homeowners to repay their home loans.
While the government may claim it is limited in what it can do to support homeowners, beyond the stamp duty cut announced by Kwarteng as part of the mini-budget, executives may put forward proposals that would mean the Treasury coordinates with the Bank of England to provide cheap money for mortgages.
The proposal could mirror the term funding scheme offered to banks during the Covid crisis, which allowed them to borrow money from the central bank at cheap rates with the intention that those savings be passed on to small business borrowers who were struggling during the pandemic.
The meeting with bank bosses, which is scheduled for 11am on Thursday, comes after a challenging week that has pushed the average two-year fixed mortgage rate above 6% for the first time since 2008.
Interest rates on mortgages have surged after the government’s mini-budget, which pushed the pound to record lows and caused bond prices to collapse, amid
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