Topical question asked in the House of Commons, by Stewart Hosie (Scottish National Party). It was answered on Tuesday, 24 April 2012 on behalf of the Treasury.

Topical Questions

Question: In normal times, the mortgage standard variable rate rises or falls as the base rate goes up or down, but we are aware that some banks—not all—are increasing their standard variable rates now, while the Bank base rate remains near the zero-bound. Will the Chancellor take this opportunity to fire a warning shot across the bows of some of those banks not to increase their standard variable rates and so put more pain on to people likely to have had pay cuts and wage freezes over the past two or three years?

Answer: It is important that we stick to the fiscal course to ensure that UK interest rates remain low for as long as possible. However, many banks face increased funding costs, partly because of the turbulence in the eurozone and partly because there is more competition for savings on the high street, and that works its way through to mortgage rates. It is important that banks provide the help they can to their customers to ensure they have the support necessary to deal with higher mortgage interest rates.

Secondary information