Homeowners facing crippling rises in mortgage repayments should be helped out with grants of up to £300 a month, Lib Dem leader Ed Davey has said.

Mr Davey said there was now a “mortgage penalty” on some householders after the disastrous mini-budget which sent interest rates soaring.

The Bank of England has said that the typical mortgage could rise by roughly £3,000 a year by the end of 2023.

In a speech, Mr Davey called for a temporary £3 billion mortgage protection fund for those who have seen their mortgage payments increase by more than 10% of their income.

“These shocking figures reveal the true horror of this Government’s failure to manage Britain’s economy,” said Mr Davey.  

“The Conservative government has added hundreds of pounds to people’s monthly mortgage bills through their disastrous budget. Struggling families are being forced to pay this Conservative Property Penalty, with many worried sick about how they will get by or even afford to stay in their homes.

“The government has a responsibility to step in and fix their own mess, by providing grants to those struggling to afford eye-watering mortgage hikes. No family should face losing their home because of the Conservative party’s reckless mismanagement of the economy.

“This Mortgage Protection Fund could be paid for by reversing the Conservative party’s unfair and unnecessary tax cuts for the big banks who are making huge profits.”