Sunak Orders Banks To Protect Mortgage Borrowers ‘who Are Finding It Tough’

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.”