Chancellor Rachel Reeves has called an emergency meeting with the chief executives of HSBC, Barclays, Lloyds, NatWest and Santander this week to discuss mitigating the economic impact of the Middle East crisis following US and Israeli attacks on Iran.
The summit, scheduled for Wednesday, comes amid growing acceptance that a major economic hit from the Iran war is unavoidable. Talks will focus on protecting vulnerable borrowers, particularly those facing mortgage rate increases, according to a source familiar with the plans.
Banks will update on their commitment to support 1.6 million customers whose fixed-rate deals end by the end of the year under the government's mortgage charter. Soaring energy prices after Iran closed the Strait of Hormuz and attacked oil-producing neighbours have led to gloomy forecasts on inflation and mortgage costs.
The Bank of England has predicted over one million UK households could see loan servicing costs rise. Banks have already pulled about 1,500 mortgage products and raised rates on remaining ones, dubbed 'Trumpflation'. The Bank forecasts 5.2 million borrowers could face higher payments by end of 2028.
Longer-term regulatory issues are also expected on the agenda ahead of Reeves's next Mansion House speech. At last year's address, she described regulation as a 'boot on the neck' of the City of London.
