Chancellor to hold talks with bank chiefs amid mortgage rate surge

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The chancellor is to meet with UK banks and construction societies amid turmoil in the mortgage sector triggered by the chaos of the mini-budget market.

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Kwasi Kwarteng will sit down with high street lenders and senior executives of the biggest challenger banks ahead of their upcoming plans to loosen regulation in the financial services sector.

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But it comes amid a growing crisis in the lending market, with many banks pulling mortgage deals last week and raising mortgage rates.

Swap rates, on which mortgage prices are based, have risen to unprecedented levels in response to current economic conditions and amid the Bank of England’s prediction of a further increase in the base rate, which currently stands at 2.25%.

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HSBC, Santander and Virgin Money are among the lending giants that had withdrawn products from the market for new borrowers since the government unveiled its mini-budgets.

And on Wednesday the rate on a typical two-year term mortgage rose more than 6% for the first time in 14 years, the same day that Prime Minister Liz Truss told a Conservative Party convention that the government was making a “difficult but necessary” decision.

However, pledging options are slowly improving this week, with 2,371 products available on Wednesday, up from 2,358 on Tuesday.

The chancellor is likely to ask bank chiefs about their plans to calm the market and prevent further mortgage deals from being dragged.

He is also set to discuss elements of his development plan, which seeks to stimulate economic growth and improve the UK’s competitiveness by reducing regulation and taxes that “burden” businesses.

This is the latest arrangement in a string of meetings Mr. Quarteng has with banking giants since taking over as minister.

In early September, he held an hour-long meeting with city leaders to caution them about the government’s plans for short-term borrowing to fund the energy aid package.

At the time, he said he was “committed to taking decisive action to help the British people now, while certainly pursuing a pro-development agenda”.

The chancellor called on top investment banks including JPMorgan, Citigroup and Morgan Stanley to prepare for their regulatory plans, known as Big Bang 2.0.

The Treasury will give an update on Mr. Quarteng’s message to bank chiefs after Thursday’s meeting.

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