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Chancellor to hold talks with bank chiefs amid mortgage rate surge

It is the latest in a string of meetings that Mr Kwarteng has arranged with the banking giants since he stepped into the ministerial role (Aaron Chown/PA)
It is the latest in a string of meetings that Mr Kwarteng has arranged with the banking giants since he stepped into the ministerial role (Aaron Chown/PA)

The Chancellor is to meet with the UK’s banks and building societies amid turmoil in the mortgage sector sparked by the mini-budget market chaos.

Kwasi Kwarteng will sit down with senior executives from high street lenders and the largest challenger banks ahead of his upcoming plans to loosen regulation in the financial services sector.

But it comes amid increasing woes in the lending market, with a number of banks pulling mortgage deals in the last week and hiking mortgage rates.

Swap rates, which mortgage pricing is based on, have increased at unprecedented levels in response to the current economic conditions and amid further predicted rises in the Bank of England base rate, which currently sits at 2.25%.

HSBC, Santander and Virgin Money are among the lending giants that had withdrawn products from the market for new borrowers since the Government unveiled its mini-budget.

And on Wednesday the rate on a typical two-year fixed mortgage surged past 6% for the first time in 14 years, on the same day that Prime Minister Liz Truss told the Conservative Party conference that the Government was pursuing “difficult but necessary” decisions.

However, the choice of mortgages has been gradually improving this week, with 2,371 products available on Wednesday, up from 2,358 on Tuesday.

The Chancellor is likely to quiz bank chiefs on their plans to soothe the market and prevent further mortgage deals being pulled.

He is also set to discuss elements of his growth plan, which strives to stimulate economic growth and improve UK competitiveness by reducing “burdensome” regulation and taxes on businesses.

It is the latest in a string of meetings that Mr Kwarteng has arranged with the banking giants since he stepped into the ministerial role.

Early in September, he had an hour-long meeting with City leaders to caution them over the Government’s plans to ramp up short-term borrowing to fund the energy support package.

Prime Minister Liz Truss and Chancellor Kwasi Kwarteng
Prime Minister Liz Truss and Chancellor Kwasi Kwarteng (Stefan Rousseau/PA)

At the time, he said he was “committed to taking decisive action to help the British people now, while pursuing an unashamedly pro-growth agenda”.

The Chancellor also summoned the top investment banks including JP Morgan, Citigroup and Morgan Stanley to prepare them for his deregulatory plans, known as Big Bang 2.0.

The Treasury will give an update on Mr Kwarteng’s message to the bank chiefs following Thursday’s meeting.