Rishi Sunak ‘warns mortgage payments set to rise by £1,000 a year’

Chancellor warned cabinet colleagues of 2.5 per cent rise in interest rates

Rishi Sunak is said to have warned his ministerial colleagues that Britain’s homeowners could see their mortgage payments rise by more than £1,000 a year.

The chancellor reportedly used this week’s cabinet meeting about the cost of living crisis that interest rates are set to rise by 2.5 per cent in the year ahead.

Mr Sunak rejected calls to provide more help for families struggling with soaring bills by arguing that borrowing risked stoking inflation and interests rates, according to The Times.

In an interview with Mumsnet, the chancellor said it would be “silly” to provide more help with energy bills right now, despite pleas from opposition parties and Tory backbenchers to do more this summer.

Mr Sunak told the website that he is willing make himself unpopular by focusing on keeping of borrowing down – citing his fears for homeowners’ interest rates.

He said: “We are already borrowing quite a lot, our own interest bill is ticking up. What that does is risk interest rates having to go up even more.”

Mr Sunak added: “And that will just add to pressure for people with mortgage payments to make and I want to make sure that we’re careful that we don’t do that and I don’t make the problem worse.”

The chancellor also said he was not “being mean” by focusing on borrowing and debt, adding: “The other thing is I care about the future – my kids, everyone else’s kids.”

Mr Sunak again rejected the opposition call for a windfall tax on fossil fuel giants, arguing that the government did not want to put off investment in new oil and gas extraction in the North Sea.

But he hinted that he could change his mind if they did not invest in greater supply. “If we don’t see that type of investment coming forward … then of course that’s something I would look at, and nothing is ever off the table in these things.”

Boris Johnson used this week’s ideas meeting to ask his cabinet colleagues to come up with “innovative” suggestions to ease cost of the living pressures without spending more money.

Tory MP Karl McCartney dismissed the transport secretary Grant Shapps’ idea that changing rules on MoTs could help with the cost of living – saying it was “absolutely crass” to suggest it would make a difference.

Brexit opportunities minister Jacob Rees-Mogg is reportedly keen to cut tariffs on food that cannot be produced in the UK, such as rice.

But international trade secretary Anne-Marie Trevelyan dismissed the idea on Wednesday, telling MPs: “In terms of tariffs, it’s a tiny, tiny proportion, 0.4 per cent, on the cost of living. That isn’t really where the key areas are.”

Mr Johnson was branded an “ostrich” with his head in the sand as Labour leader Sir Keir Starmer raised cost-of-living concerns at PMQs this week.