Jeremy Hunt will haul in UK’s biggest banks to help households deal with ‘mortgage bomb’

THE Chancellor will haul in the country’s biggest banks to help households deal with the “mortgage bomb”.

Jeremy Hunt will meet lenders including HSBC and NatWest on Friday to discuss what “flexibilities” they can offer.

It comes as the Bank of England is set to raise interest rates tomorrow — with the average two-year fixed deal at six per cent.

Experts warned if interest rates are kept high for too long it could push the UK into recession.

Mr Hunt said he wanted to ensure everything was being done to “help families paying higher mortgage rates in ways that do not themselves feed inflation”.

He added: “I’ll be asking lenders what help they can give to people struggling to pay the more expensive mortgages and what flexibilities might be possible for families in arrears.”

Senior Tory MPs demanded the Treasury bring back mortgage tax relief to stop struggling families from losing their home.

But Mr Hunt immediately rejected the tax break, scrapped in 2000.

He said: “We won’t do anything that would mean we prolonged inflation.”

Meanwhile, Money Saving Expert founder Martin Lewis called on Mr Hunt to force banks to allow homeowners to take mortgage holidays or switch to an interest-free loan without it impacting on their credit scores.

Mr Lewis had warned of the “mortgage ticking time bomb” which he says is now exploding.

But lenders say they are on standby to help those with rising mortgage costs at a time of spiralling prices and high inflation.

Paul Dales, at Capital Economics, said: “We suspect inflation will drop to two per cent only if the Bank of England triggers a recession by raising interest rates from 4.5 per cent now to 5.25 per cent and keeps them there until the second half of 2024.”

PM Rishi Sunak has vowed to halve inflation to five per cent by the end of the year.

Figures out today are expected to show inflation falling to 8.4 per cent from 8.7 in April.