The government has instructed banks to do more to help and protect struggling homeowners from sharp hikes in mortgage costs as interest rates look set to rise again next week.
Strong wage growth data once again prompted traders to revise up forecasts for the peak of interest rates yesterday and sent government borrowing costs to their highest since 2008.
It came as the governor of the Bank of England, Andrew Bailey, said he was planning to launch a review into why the central bank has failed to manage inflation, which remain more than four times higher than the Bank’s 2% target.
Higher government borrowing costs and expected further increases in interest rates continue to place upward pressure on mortgage borrowing costs.
Mortgage rates have risen sharply in recent weeks, prompting the prime minister’s spokesperson to tell banks to look after customers who were struggling with higher costs.
He said: “The chancellor has made clear his expectation that lenders should live up to their responsibilities and support any mortgage borrowers who are finding it tough right now.”
The spokesman added: “There do remain a large range of mortgage deals available to the public, but we know this current situation may be concerning for some homeowners and mortgage holders.”
Official data on Tuesday showed average earnings jumped at the fastest rate on record last month, while unemployment fell.
George Buckley, economist at Nomura, said the strong jobs and pay figures “are likely to unnerve the MPC and the question now is whether the Bank opts for a 0.25 or 0.5 percentage point move”.
Jeremy Hunt, the chancellor, commented: “Rising prices are continuing to eat into people’s pay cheques – so we must stick to our plan to halve inflation this year to boost living standards.”
“For god’s sake don’t crash the housing market, not with less than 18 months before there has to be an election. The whole future of the Conservative party is relying on the feel good, fake it till you make it trappings of low interest rates”
“We can think of other ways to get inflation under control but don’t hand the housing stock over to the asset managers” Err how about we put up taxes? %
5h1t, 5h1t **** and buggerations, our voters are still paying for their new t1t5, teeth and hair transplants
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
The Tories really have backed themselves into a corner.
Rather than paying the piper as the credit crunch finished, they have instead used all that Quantitative Easing money to line their (and their friends’) pockets.
If all that extra printed money had been paid back then we wouldn’t have had to expand it even further during Covid.
All of that QE money has been stored away by wealthy people and wealthy corporations. And now it has to be paid back. This is proving to be very painful as extracting money out of rich people is very difficult because they don’t like it.
REMEMBER – the system isn’t broken; it’s working exactly as it was designed to.
Using everyday interest rates to control the asset value bubble and the supply chain inflation bubble is just wrong.
Increasing mortgage rates will not in any way help to lower this kind of inflation. It will just make rich people even richer and poor people even poorer. It is capitalist wealth redistribution but on an even grander scale!
These interest rate rises are like using a really, really big hammer to hammer a nail into a piece of wood. Except that the nail is lying flat at the one end of the piece of wood and you are hammering at the other end of the wood, hoping that maybe the vibrations will do the work for you…
“Insanity is doing the same thing over and over and expecting different results.” (wrongly attributed to Albert Einstein)
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register