Mortgage assistance programmes, according to Chancellor Jeremy Hunt, would “make inflation worse, not better”.
However, he stated that he would meet with mortgage lenders later this week to see what assistance they may offer to families that are struggling with growing expenses.
Due to rising interest rates, mortgage expenses are skyrocketing for homeowners.
However, the government asserted that it was “spending record amounts” to assist people and already had “specific tools” to do so, mentioning assistance – in the form of a loan – for those who get benefits as an example.
In order to reduce the strain of rising living expenses, a spokesman said households have received an average of £3,300.
To avoid what he called a “mortgage bomb,” Conservative MP Sir Jake Berry urged Mr Hunt to “reintroduce a bold Conservative idea of mortgage interest relief at source” in Parliament on Tuesday.
He stated, “If we don’t help families now, all the other money we have spent helping them will be wasted if they lose their home.”
“Those kind of schemes, which involve injecting large amounts of cash into the economy, would be inflationary,” he said.”As much as we sympathise with the difficulties and do everything we can to help people seeing their mortgage costs go up, we won’t do anything that would mean we prolong inflation.”
The government, however, was not considering such a step, according to the chancellor.
Will the UK enter a recession as a result of rising mortgage rates?
Average remortgaging expenses will increase by £2,900.
The rate of price growth, or inflation, was 8.7% in April, meaning that overall consumer prices were 8.7% higher than they were in April 2022.
The Bank of England has been increasing interest rates in an effort to curb inflation, which has driven up borrowing costs overall, including those for mortgages.
The Bank is anticipated to increase rates this week and keep them unchanged for longer.
The funding cost of mortgages had already increased before the Bank’s decision, affecting both first-time borrowers and those looking to refinance.
As a result of lenders cancelling deals and abruptly raising rates, the average rate on a two-year fixed loan surpassed 6% on Monday.
However, Treasury Minister Andrew Griffith said that such measures would delay slowing inflation. The Liberal Democrats also asked for mortgage relief and a mortgage safety fund.
Rachel Reeves, the shadow chancellor for Labour, questioned Mr Hunt about how people would be able to pay the “Tory mortgage penalty” because of increasing prices that were “a consequence of the Conservative mini-budget last year and 13 years of economic failure.”
