London, Jun. 23, (PA Media/dpa/GNA) – Banking bosses held a “very productive” meeting with the British finance minister, Jeremy Hunt, on Friday morning, after a shock interest rate hike deepened the mortgage crisis and threatened more pain for struggling households.
Hunt, officially known as the chancellor of the exchequer, met large lenders including HSBC, Santander and Barclays in his offices in Downing Street in London early on Friday morning, with the government being urged to relieve the pressure.
“We had a very productive meeting. We’re doing everything we can to help customers and help with the anxieties,” NatWest boss Alison Rose said as she left the meeting.
She added they were “very keen” to help everyone.
Chief executive of Lloyds Banking Group Charlie Nunn said that bosses had held a “good working discussion with the chancellor.”
Prime Minister Rishi Sunak and Hunt have ruled out a financial intervention as rates were hiked as the Bank of England tries to bring down stubbornly high inflation.
The opposition Labour Party has called for banks to be compelled to help struggling mortgage holders in a tougher response, while some backbench Conservatives have demanded support for under-pressure borrowers.
Bosses arrived at Downing Street from around 7:30 am (0630 GMT) onwards, with the meeting coming a day after the Bank of England issued its 13th interest rate hike in a row, this time by half a percentage point from 4.5% to 5% in the sharpest increase since February.
Surprising economists who had been expecting a smaller hike of 0.25 percentage points, the move brought rates to the highest level in nearly 15 years.
The move came in an attempt to reduce inflation, which measures the rate of rising prices, which remained at 8.7% in May despite efforts to bring it down.
Other attendees included Barclays chief executive Matt Hammerstein, Virgin Money boss David Duffy, and Nationwide chief executive Debbie Crosbie.
Labour leader Keir Starmer and his shadow chancellor Rachel Reeves are urging ministers to order banks to offer further support, such as temporarily allowing struggling borrowers to switch to interest-only payments or lengthen their mortgage period.
Financial markets are predicting that interest rates will strike a high of 6% by the end of the year.
There have been warnings that 1.4 million mortgage holders will lose at least a fifth of their disposable income in additional repayments.
They are set to rise by £2,900 ($3,685) for the average household remortgaging next year, according to economists at the Resolution Foundation.
More than 80% of homeowners with a mortgage are on fixed-rate deals, according to trade association UK Finance.
However, around 2.4 million fixed-rate mortgage deals are due to end before the end of 2024, with some potentially heading for a bill shock.
GNA