Bosses of the UK’s largest banks and building societies have met with Chancellor Jeremy Hunt as mortgage rates rose again following yesterday’s shock 0.5% base rate hike from the Bank of England.
The meeting is designed to encourage lenders to do more.for households struggling to meet mortgage payments after Hunt, and UK prime minister Rishi Sunak, ruled out direct help from the government.
Heads of the UK’s five largest mortgage lenders were said to be at the meeting including NatWest chief executive Alison Rose, Lloyds CEO Charlie Nunn, Virgin Money’s David Duffy, Nationwide’s Debbie Crosbie and Mike Regnier of Santander UK.
Hunt had said previously the meeting allow him to “ask what help they can give to people who are struggling to pay more expensive mortgages and what flexibilities might be possible for families in arrears”.
Andrew Bailey, the Bank of England Governor, meanwhile has come in for fierce criticism for yesterday’s hike, which sees UK base rates rise to 5% while also marking the thirteenth-month running rates have gone up.
Bailey admitted the rate rise would cause "difficulty and pain" for many.
Critics on one side say mortgage borrowers now are paying for the bank's inaction earlier while others say waiting and seeing how the recent spate of hikes played out before ratcheting them up again would have made more sense.
According to Moneyfacts, an average two-year fixed rate mortgage is currently at 6.19% while the five-year rate is 5.82%, or for both almost double this time last year.
Banks have also been criticised for putting up mortgage rates almost immediately while dragging their heels over higher savings rate s for depositors.
This “endowment effect” will generate millions in additional profits for the banks, say analysts.