Mortgage Market

Lindsay Hoyle Excerpts

Tuesday 13th June 2023 Commons Chamber

[Andrew Griffith]

We enjoy, as ever, the hon. Member’s rhetoric, but he did not address what his plan would be. He also did not acknowledge that this has an international factor. Perhaps he or one of his colleagues would like to explain why we have seen similar interest rate increases in the USA, where the 30-year rate—the market is somewhat different there—has increased from 4% at the start of 2022 to more than 6% today.

[Mr Speaker]

In fairness, the right hon. Member for Wolverhampton South East (Mr McFadden) is right honourable. But there we are. I call the Chair of the Select Committee.

[Harriett Baldwin (West Worcestershire) (Con)]

The Government have given the Bank of England the task of targeting inflation at 2%, and our Committee has regularly held the Bank of England Governor’s feet to the fire over its performance on that inflation target. Mortgage rates have been increasing because inflation has been higher for longer than expected. In fact, the Governor said in his evidence to our Committee last November that from now on, our grumpy constituents who are having to pay higher mortgage rates should complain to him rather than to the Government. Will the Economic Secretary endorse the Treasury Committee’s campaign to ask the banks why, instead of just raising mortgage rates on the day the Bank of England raises rates, they do not also increase the savings rates that are paid to our constituents?

[Andrew Griffith]

The independent Governor of the Bank of England is, of course, right. Today we have seen strong print on wage growth, in part due to the 9.7% increase in the national living wage, on which I hope Members will join me in congratulating the Government. My hon. Friend is, as ever, right to highlight the impact on savers. It is important to me and to this Government that savers get a fair deal, which is one of the reasons why National Savings and Investments continues to offer savers an attractive range of products in the market.

[Mr Speaker]

I call the SNP spokesperson.

[Stewart Hosie (Dundee East) (SNP)]

Millions of households are now struggling as their fixed-rate mortgages end and they are moved to much higher variable rates. We also know that only a third of the households that are expected to move from cheap fixed-rate deals have done so, so there is a great deal of pain to go, with 116,000 households a month coming off fixed-rate deals.

Some in the City are suggesting that what we are seeing is a complete reset of the mortgage market, which would imply that there should be a complete reset of the Government’s approach. Given that changes to mortgage rates are driven by changes to the base rate, and that the base rate is the central bank’s primary tool to meet the 2% inflation target handed to it by the Government, what discussions have the Government had with the Governor of the central bank about the effectiveness, or the appropriateness, of an inflation target being the primary target that the central bank works towards?

[Andrew Griffith]

At his spring statement, the Chancellor was very clear about the Bank of England’s continued remit, beyond which it remains operationally independent. It has been a long-standing feature of this House that Treasury Ministers do not tell the Bank of England how to run monetary policy. Three of the Prime Minister’s five priorities are getting the economy growing, reducing debt and halving inflation.

[Mr Speaker]

I congratulate the now Sir Simon Clarke.

[Sir Simon Clarke (Middlesbrough South and East Cleveland) (Con)]

That is very kind, Mr Speaker.

I pay tribute to the right hon. Member for Dundee East (Stewart Hosie) for the previous question, which was extremely interesting and perceptive. Of course, it should escape nobody’s attention that, today, gilt yields are higher than they were when my right hon. Friend the Member for South West Norfolk (Elizabeth Truss) was forced from office in the autumn. I agree entirely with the Minister that it is important to avoid the inflaming of inflation that the Opposition would do, but does he also agree that ultra-low interest rates cannot be seen as the sole benchmark of economic success and that we ought to aspire to higher trend growth as much as low interest rates?