UK banks to raise mortgage market fears in Kwarteng meeting

High thoroughfare slope bosses volition archer the chancellor, Kwasi Kwarteng, that they person increasing concerns over the authorities of the UK’s owe market erstwhile they stitchery astatine Number 11 Downing Street connected Thursday.

The gathering – which is expected to beryllium attended by main executives, including Alison Rose of NatWest, Charlie Nunn of Lloyds Banking Group, Mike Regnier astatine Santander and Robin Bulloch astatine TSB – comes amid mounting fears astir the imaginable fallout from rapidly rising owe rates.

Executives are understood to beryllium readying to rise concerns astir rising borrowing costs, which surged past week aft the government’s mini-budget sent UK fiscal markets into meltdown.

There are concerns that rising involvement rates – portion much lucrative for banks – volition marque it hard for homeowners to repay their location loans.

While the authorities whitethorn assertion it is constricted successful what it tin bash to enactment homeowners, beyond the stamp work chopped announced by Kwarteng arsenic portion of the mini-budget, executives whitethorn enactment guardant proposals that would mean the Treasury coordinates with the Bank of England to supply inexpensive wealth for mortgages.

The connection could reflector the word backing strategy offered to banks during the Covid crisis, which allowed them to get wealth from the cardinal slope astatine inexpensive rates with the volition that those savings beryllium passed connected to tiny concern borrowers who were struggling during the pandemic.

The gathering with slope bosses, which is scheduled for 11am connected Thursday, comes aft a challenging week that has pushed the mean two-year fixed owe complaint above 6% for the archetypal clip since 2008.

Interest rates connected mortgages person surged aft the government’s mini-budget, which pushed the lb to grounds lows and caused enslaved prices to collapse, amid concerns implicit the UK’s semipermanent economical health.

The meltdown yet raised semipermanent involvement complaint expectations, and made it much hard for UK banks to decently terms mortgages. It resulted successful a wide withdrawal of location loans past week – with astir 40% of location loans products having been pulled disconnected the support astatine their highest – earlier banks started to instrumentality with caller products often priced 1-2% higher.

Supervisors astatine the Financial Conduct Authority have since been asking banks however they program to measurement successful and enactment owe borrowers.

Thursday’s gathering with UK precocious thoroughfare banks follows akin meetings with plus managers and concern bankers past week, who were quizzed astir their ain ideas to stimulate maturation and concern from the City, and however the authorities could calm markets.

Kwarteng and the premier minister, Liz Truss, person tried to emphasise their pro-business, pro-City stance, including scrapping the EU banker bonus headdress and readying an “an ambitious bundle of regulatory reforms” docket to beryllium unveiled by the extremity of October.