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Kwasi Kwarteng is in crisis talks with mortgage lenders now that interest rates are rising

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Kwasi Kwarteng is in crisis talks with mortgage lenders as the average five-year fix rises above 6% for the first time in a decade – increasing pressure on struggling households

  • Kwasi Kwarteng meets with mortgage lenders as rates for Britons continue to rise
  • Average five-year fixes have surpassed 6 percent for the first time since 2010
  • Prices rise as markets expect Bank of England to raise key interest rates

Kwasi Kwarteng is in crisis talks with mortgage lenders today as the average five-year fix exceeded 6 percent for the first time in ten years.

The chancellor is meeting big lenders and the biggest challenger banks after his mini-budget has caused a plunge in the pound and chaos in the market.

A large number of mortgage deals have been signed and interest rates have been raised as institutions anticipate that the Bank of England will take tougher action to curb inflation.

Yesterday, rates on a typical two-year fixed mortgage rose above 6 percent for the first time in 14 years, the same day Liz Truss told the Conservative Party conference that the government was making “difficult but necessary” decisions.

According to Moneyfacts.co.uk, the average five-year fixed-rate mortgage had risen to 6.02 per cent today – the first time it has risen 6 per cent since February 2010.

Yesterday, rates on a typical two-year fixed mortgage rose above 6 percent for the first time in 14 years – suggesting many households will spend a quarter of their income paying off loans

Kwasi Kwarteng (pictured in Downing Street yesterday) meets major lenders and the biggest challenger banks after his mini-budget caused a plunge in the pound and chaos in the market

Kwasi Kwarteng (pictured in Downing Street yesterday) meets major lenders and the biggest challenger banks after his mini-budget caused a plunge in the pound and chaos in the market

HSBC, Santander and Virgin Money are among the credit giants that have taken products off the market for new borrowers since the government announced its mini-budget.

Yesterday, rates on a typical two-year fixed mortgage rose above 6 percent for the first time in 14 years, the same day Liz Truss told the Conservative Party conference that the government was making “difficult but necessary” decisions.

According to Moneyfacts.co.uk, the average five-year fixed-rate mortgage had risen to 6.02 per cent today – the first time it has risen 6 per cent since February 2010.

The average two-year fixed-rate mortgage is 6.11 percent, after crossing 6 percent yesterday in a new peak since November 2008.

However, the choice of mortgages appears to be gradually improving, with 2,371 products available yesterday from 2,358 on Tuesday.

Mr. Kwarteng is expected to question bank chiefs about their plans to calm the market and prevent further mortgage deals.

Liz Truss told the Conservative Party conference yesterday that the government is pursuing 'difficult but necessary' decisions

Liz Truss told the Conservative Party conference yesterday that the government is pursuing ‘difficult but necessary’ decisions

He also plans to discuss elements of his growth plan, which aims to boost economic growth and improve UK competitiveness by reducing ‘tricky’ regulations and taxes on businesses.

It is the latest in a series of meetings Mr Kwarteng has arranged with the banking giants since he stepped into the ministerial role.

In early September, he met with city leaders for an hour to warn them of the government’s plans to borrow more short-term loans to fund the energy bailout package.

At the time, he said he was “determined to take decisive action now to help the British people while pursuing an unabashedly pro-growth agenda”.

The chancellor also called on major investment banks, including JP Morgan, Citigroup and Morgan Stanley, to prepare them for his deregulation plans known as Big Bang 2.0.

In a series of interviews this morning, Tory party chairman Jake Berry highlighted the government’s energy bill bailout, suggesting it will help families deal with mortgage rates.

He told Times Radio: ‘If you look at global trends, it is very likely that interest rates set by the independent Bank of England have risen in the coming months, so imagine if the government hadn’t acted.

‘Imagine that families are faced with a £6,000 utility bill that they can’t afford and their mortgages go up. That would be totally untenable.

“Although the Bank of England is independent, the Prime Minister also made it clear in her speech that she and the Chancellor would work with the Bank to try to keep the mortgage market stable and always ensure that the Governor maintains his independence.”

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