- Chancellor Rules Out Mortgage Bill Support
- Government Fears Aid for Mortgage Payments Would Derail Inflation Goals
- Price Limits on Food Ruled Out
Later this week, the chancellor will meet with the major mortgage lenders to determine what assistance they can provide to those in arrears and those struggling with more costly mortgages.
Mortgage bill support has been ruled out by the chancellor out of concern that it would increase inflation.
In response to a question in the House of Commons, Jeremy Hunt stated that “schemes that involve injecting large sums of cash into the economy will be inflationary at this time.
Despite expressing compassion for individuals with higher mortgage costs, he stated, “We will not do anything that would prolong inflation.”
Tory MPs encouraged him to revive Miras, the “bold Conservative idea” of mortgage interest reduction at source. A 1980s policy that provided mortgage holders with tax relief on interest payments.
Hunt and Treasury economic secretary Andrew Griffith warned that such a scheme would raise inflation.
Instead, Mr. Hunt stated that he will meet with the major mortgage lenders later this week to inquire about the assistance and flexibility they can provide to those struggling with costly mortgages and delinquent homeowners.
The responses echo Prime Minister Rishi Sunak’s and Treasury sources’ assertions that the government’s aim of halving inflation would be derailed by financial aid for mortgage payments.
Since May, when the consumer price index method of measuring inflation did not decrease as much as anticipated and core inflation – the rate of price rises excluding the volatile food and energy sectors – reached a 30-year high, mortgage payments have consistently increased.
Interest rates will climb further as the Bank of England raises its base rate to 2% to decrease inflation. The next probable increase will occur on Thursday.
Mortgage companies have already incorporated Monday’s average two-year interest rate increase of 6.01%.
Mr. Hunt ruled out price limits on food on Tuesday in the House of Commons. In response to 16.5% food inflation in the four weeks preceding June 11.
“I do not believe price caps are the best long-term solution,” he said, adding that he will meet with regulators next week “to discuss further what needs to be done about supermarkets.”
