Mr Pill highlighted the combined effect of the government’s new fiscal stance, “significant” reaction in the markets and the broader context of rising interest rates in other countries. “All this will require a significant monetary response,” he said.
Mr Pill’s comments came as Mr Kwarteng told a group of leading insurers and asset managers on Tuesday that he was “confident” in the plan set out last week in his so-called mini-budget, and later spoke to Conservative MPs to calm fears that the government had lost control of the economic situation. Meanwhile HSBC and Santander, two of the UK’s largest mortgage providers, suspended new deals on Tuesday, while Nationwide increased rates, as homebuyers chased a dwindling supply of home loans. Together with Lloyds Banking Group, which suspended some products on Monday, the lenders account for about half of the UK mortgage market. A host of smaller providers have also stopped offering products in response to Mr Kwarteng’s mini-budget.
Aaron Strutt, a broker at Trinity Financial, said: “For the moment ... there are options for borrowers, but we need the other lenders to come back into the market otherwise they will receive too many applications and pull out.”