British finance minister Kwasi Kwarteng has told banks that his department would work closely with the financial sector on mortgage lending, the Treasury said, after market turmoil following his mini-budget led to higher mortgage rates.
The budget last month caused wild swings in the sterling funding markets, which determine what mortgage rates lenders offer to homeowners, as investors fretted over how the government would fund its plans.
Since his appointment last month, Kwarteng has hosted a series of meetings across the financial services sector.
Attendees at the meeting with retail banks, building societies and challenger banks included Barclays, Lloyds Banking Group and NatWest.
"While it is the responsibility of the sector to provide the best value for mortgage rates, the Chancellor confirmed that the Treasury would continue to work closely with the sector in the weeks and months ahead," the Treasury said in a statement following the meeting.
Kwarteng's September 23 announcement of £45 billion of tax cuts and a hike in government borrowing sent markets into a tailspin and pushed borrowing costs sharply higher.
An emergency intervention by the Bank of England helped to stabilise markets, but the knock-on effects have pushed mortgage rates higher, potentially affecting many households already battling with rising costs of living.
Financial services provider Moneyfactslast week estimated that a record 935 mortgage products were pulled overnight.
It said this week that an average two-year fixed rate mortgage was now up to 6.07%, compared to 2.25% a year ago, while the five year rate rose to 5.97% from 2.55%.
One banking source briefed on discussions at the meeting said mortgages were the "hot topic", with affordability "the overriding concern".
Strains on customers with interest-only and buy-to-let mortgages in particular were raised by lenders, the source said, as well as actions the government could take to help protect vulnerable customers such as changes to the way unpaid property-related tax debts were pursued.
Banks also raised concerns that the FCA's planned 'consumer duty' for protecting customers could stifle lending unless a balanced approach was taken, the source said.
Kwarteng was asked by lenders to extend the government's mortgage guarantee scheme, which offers government underwriting for 5% deposit mortgages and which is due to expire at the end of the year.
A second source familiar with the discussions said the Treasury had indicated it would look into it.