London Thanasis Gavos

A meeting with managers of major banks and financial institutions that grant mortgages was held very early in the morning in Downing Street. Minister of Finance of the United Kingdom Jeremy Huntamid concerns about the pressures on borrowers.

At the beginning of the week the average two-year fixed interest rate in the market mortgage loans rose above 6%, with the picture becoming more worrying for borrowers after yesterday’s 13th consecutive rise in the Bank of England’s key interest rate by 50 basis points to 5%.

Yes, yes most economists are discounting a further rate hike from the central bank in the fight against inflation, up to 6%a height that will be greater than 2000.

Leaving the meeting an hour and a half later the managing director of the bank Lloyd’s Charlie Nunn spoke of “good discussions at working level” and looking for ways to help borrowers. But he referred Mr. Hunt for possible announcements.

The opposition is pressing Prime Minister Rishi Sunak to decide on emergency measures to support mortgage holders, especially those forced to look to the market for a renewal of their loan, with supply limited and expensive. An estimated 3 million fixed-rate mortgages have lapsed since the central bank began raising interest rates early last year.

Labor is proposing, among other things, to allow borrowers to pay only the interest, to extend the term of their loan or to have a six-month freeze on the home foreclosure process.

The government has ruled out providing any direct financial assistance to borrowers.

The ‘crisis’ in the mortgage market comes amid the UK’s protracted punctuality crisis, with inflation stubbornly high. For May, it stood at 8.7% despite forecasts for a decrease to 8.4% and while up until March it exceeded 10%.

And structural inflation, which excludes volatile fuel and food prices, rose in May to 7.1% from 6.8% the previous month.

The difficult financial situation for many citizens in Britain is reflected in a survey by the National Institute for Economic and Social Research, which estimates that another 1.2 million households (4% of the national total) will run out of savings by the end of the year due to higher interest rates. mortgage payments.

In total, the percentage of “bankrupt” households will increase to almost 30%.

Another report, from the Institute for Fiscal Studies, shows that 1.4 million mortgage holders will see their disposable income drop by more than 20% due to rising interest rates.

In addition, the Center for Economic and Business Research warns of 9,400 additional foreclosures over the next three years due to mortgage defaults at rising interest rates. In total, for the three-year period 2023-2025, the Center foresees almost 62,000 house foreclosures.

Rishi Sunak said on Thursday he supported the Bank of England’s moves because the primary goal is to reduce inflation, despite economists warning that the country may be pushed into recession to reduce the rate of price growth.

“Everything will be fine and we will get through this,” commented the British Prime Minister.