‘Absolutely outrageous’ banks not matching savings with mortgage rates – live

Martin Lewis has said it seems “absolutely outrageous” that the rates savers are sitting on are lagging behind the rates being charged to borrowers.

The Money Saving Expert founder, who spoke to the chancellor earlier this week, said he had suggested lenders should be stopped from increasing their profits on the back of interest rates going up.

He said: “They’re putting borrowing up, but they’re not putting savings up by the same amount.

“That seems absolutely outrageous to me, because when the banks were struggling in 2007/2008, we, the state, the taxpayer, bailed them out.”

Some 10,000 houses could be repossessed over the next three years if interest rates hit 6 per cent, a think tank has warned.

The Centre for Economics and Business Research says: “Our ‘high rates’ scenario assumes that the Bank of England meets current market expectations and raises rates as high as 6.25% by early 2024, with the bank rate still standing at 5% by the end of next year.

“Our model shows that this would lead to more than 9,400 additional repossessions between 2023 and 2025 compared to the baseline scenario, implying a total of 61,600 repossessions for the period.”

Supermarkets regard cutting prices as “very important”, according to a former boss of Asda, after the Prime Minister warned retailers about pricing “responsibly and fairly”.

Andy Clarke, who served as Asda’s chief executive officer between 2010 and 2016, said the big chains were “heavily focused” on competitive pricing as the industry hit back over suggestions it has looked to maintain profit margins by passing on inflated costs to customers.

Some 1.2 million households will become insolvent this year as a direct result of higher mortgage payments, a think tank has warned.

Max Mosley, an economist at the National Institute of Economic and Social Research, said: “The rise in interest rates to 5 per cent will push millions of households with mortgages towards the brink of insolvency.

“No lender would expect a household to withstand a shock of this magnitude, so the government shouldn’t either.

“Some investment should be done in forbearance agreements, giving households and lenders the ability to create payment plans that work for each other.”

The Bank of England’s decision to hike interest rates to 5 per cent yesterday means millions of borrowers are facing bills £6,000 higher than they were two years ago.

The Times reports that the cumulative effect of recent rate rises means that those not on a fixed rate are now typically paying around £6,300 more annually.

Economists believe the base rate will have to rise to 6 per cent to hit the Bank’s 2 per cent inflation target.

Rishi Sunak’s government must take “responsibility” for the country’s current economic woes, a shadow minister has said.

Labour’s shadow business and consumer minister Seema Malhotra said the UK had been “hit harder” than our countries in terms of inflation.

More comments from the Feltham and Heston MP below:

UK consumer confidence improved for the fifth consecutive month despite rising interest rates, according to a poll.

A survey by research group GfK, carried out before yesterday’s hike by the Bank of England, found lower energy prices and a strong labour market were behind the rise.

GfK said on Friday its consumer confidence index, a monthly measure of how people view their personal finances and wider economic prospects, rose three points to minus 24.

The Bank of England has finally taken a decisive, hawkish turn, imposing a shock 0.5 percentage point interest rate rise on Britain’s beleaguered borrowers.

Its previously cautious approach led to City predictions that it would only hike rates by a quarter point.

But the backdrop to the decision has been getting increasingly uncomfortable for governor Andrew Bailey and his rate-setting Monetary Policy Committee (MPC).

It noted that May’s 8.7 per rate of inflation, unchanged from April, was 0.3 per cent higher than its forecast published in May’s inflation report.

Worse still, services inflation rose to 7.4 per cent in the same month, 0.5 percentage points higher it had expected. Then there was “core” inflation, which excludes volatile food, alcohol, tobacco and energy prices. That number, seen as a measure of the underlying inflation in the economy, unexpectedly leapt to 7.1 per cent from 6.8 per cent, its highest for more than three decades.

Harriet Baldwin, Tory chairwoman of the Treasury select committee, said mortgage holders should be shown the same “forbearance” by banks during the current period of rising interest rates as they were during Covid.

Asked whether banks should be instructed by the Financial Conduct Authority or ministers to provide such assistance – as Labour has suggested – the Tory MP said the regulator was being “pretty rigorous” on the issue.

“There is going to be a new consumer duty that is going to apply to banks from next month, which was put into legislation last year, and I think that will again require banks to demonstrate how they are treating their mortgage customers with the right degree of forbearance during this difficult time,” she added.

Ms Baldwin also said she wanted to see the price of goods on shop shelves come down “as fast” as they when they are put up.

She said the UK was “past the worst in term of food prices”, but she had “concern” that “as they fall in the wholesale markets, they are not necessarily passed on very fast to consumers”.

Rishi Sunak will not join his chancellor for talks with banks over the mortgage crisis.

The prime minister is instead meeting troops on Armed Forces Day this morning.

No media have been invited to attend the event and the PM will head back to Downing Street once it’s finished, where he will reporteldly spend the weekend.