Question to the HM Treasury:

To ask the Chancellor of the Exchequer, whether he has made an assessment of the implications for his policies of trends in the level of interest rates charged by financial companies.

High inflation is the greatest economic challenge that we must address, which is why the Government has made it a priority to halve inflation this year, on the path back to the 2% target. Monetary policy, including all decisions on Bank Rate, is the responsibility of the independent Monetary Policy Committee at the Bank of England, and they have the Government’s full support as they take action to return inflation back to target.

MPC decisions over Bank Rate guide commercial banks’ decisions over the retail interest rates they charge on loans and pay on deposits. However, banks also make commercial judgements that influence the degree of pass‐through from changes in Bank Rate into retail interest rates, with conditions in financial markets and in the banking sector also influencing interest rates paid on deposits or charged for lending.

Nevertheless, we recognise this will be a concerning time for mortgage borrowers, particularly those who are due to come to the end of their existing deal in the immediate future.

Following the commitments agreed to support borrowers in December, the Chancellor met with mortgage lenders, UK Finance and the Financial Conduct Authority on 23 June. At this meeting, lenders agreed to a new Mortgage Charter to support borrowers struggling with their mortgage payments, which was published on 26 June. This sets out the standards lenders will adopt when helping their customers, including new flexibilities to help customers manage their mortgage payments over a short period. More information can be found at: https://www.gov.uk/government/publications/mortgage-charter/mortgage-charter

This is in addition to the measures the Government has already taken aimed at helping people to avoid repossession, including Support for Mortgage Interest (SMI) loans, and protection in the courts through the Pre-Action Protocol.