Does UK govt think its budget will increase mortgage rates?

Treasury minister James Murray has been speaking to the media this morning.

He is one of those working on next week’s budget.

Yesterday the chancellor confirmed she was planning to change the government’s fiscal rules – how it calculates its debt and the parameters for spending.

The shadow chancellor Jeremy Hunt warned this could push up the amount people pay on mortgages.

Mr Murray was less convinced.

He told Sky News: “I would say that what we’re doing is actually about making sure that mortgages and taxes, prices, are as low as possible in the long run.

“Because if you can get the economy growing, then you put the economy and people’s livelihoods in a better position, and that’s what we’re doing.”

The way the rules are changing look set to make investment easier for the state – with the hope the private sector will follow with their own money.

Of course, mortgage rates are set by the private market, rather than the government, so the way things go next week is still in the aether.

Part of the reason the government is being so direct in its signalling in what is to come is to prepare the markets so they are not shocked when the chancellor gives her speech.

Mr Murray says: “What the markets will see next Wednesday when the chancellor stands up in the House of Commons, they will see somebody saying, we are not going to borrow for day to day spending, we’re going to get debt falling as a share of GDP, and we’re going to put in place guardrails about investments to make sure that delivering value for money and at all that will give the markets confidence.

“And it will mean that we can get the economy growing to make people better off.”