Jeremy Hunt has issued a warning in the Commons that homeowners should not expect any significant financial support to ease the growing hurt caused by the mortgage crisis.
Despite people’s monthly home payments increasing by hundreds of pounds, the Chancellor warned a significant package to provide cost of living relief would risk prolonging the inflation problem currently dogging the British economy.
Mr Hunt was asked by Tory MP Sir Jake Berry if it was time to reintroduce a “bold Conservative idea of mortgage interest relief at source”.
Sir Jake warned: “If we don’t help families now, all the other money that we’ve spent to help them will have been wasted if they lose their home.”
Despite the cri de cœur from one of his own MPs, Jeremy Hunt was stoic in the face of public fears.
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Mr Hunt said the Tory MP should “understand that those kinds of schemes which involve injecting large amounts of cash into the economy right now would be inflationary.”
“As much as we sympathise with the difficulties, and we’ll do everything we can to help people seeing their mortgage costs go up, we won’t do anything that would mean we prolong inflation.”
He reiterated his opposition to mass spending on mortgage support when responding to another MP, while promising to “look at doing everything we can rot help people who are under pressure.”
“We won’t do things that will prolong the inflationary agony that people are going through and we have to be very careful because a lot of the schemes that are being proposed would actually make inflation worse and not better.”
The latest inflation statistics will be published on Wednesday, and are expected to show price rises remain very steep.
The Bank of England is currently trying to deal with ‘sticky inflation’, with food price rises staying especially high.
The Bank’s raising of interest rates is an attempt to bring inflation down, though it also hits homeowners who are applying for, or renewing, mortgages.
The Lib Dems have called for a £3 billion mortgage protection fund to help people struggling with their bills.
Matthew Lesh, an economist at the free market IEA think tank, has described the proposal as a “dumb policy”, however.
Mr Lesh explained the move would be “self-defeating”, with the Government having to borrow to fund the £3 billion in the first instance, which would push up gilt years and therefore interest rates even further.
The recipients of the fund would also have higher spending power as a result of the subsidy, which would then be spent and feed more inflation into the economy, again increasing interest rates.