Chancellor Jeremy Hunt has said he will meet lenders later this week to ask what help they can give to borrowers struggling with their mortgage.

Mr Hunt told the House of Commons he would be asking what flexibilities might be possible for borrowers in arrears.

He said: “We won’t hesitate in our resolve to support the Bank of England as it seeks to strangle inflation in the economy. The best policy is to stick to our plan to halve it.

“But I also want to make sure we do everything possible to help families paying higher mortgage rates in ways that do not themselves feed inflation.

“So later this week I’ll be meeting the principal mortgage lenders to ask what help they can give to people struggling to pay the more expensive mortgages and what flexibilities might be possible for families in arrears.”

It is understood that the meeting will take place on Friday.

Various calls have been made for the Government to step in to offer further help to struggling borrowers.

However, the Chancellor said the Government will not provide financial support to mortgage holders which would fuel inflation.

Conservative former minister Sir Jake Berry told the Commons: “People are very concerned with what is being described as the mortgage bomb about to go off.

“Is now the time for him to look at reintroducing a bold Conservative idea of mortgage interest relief at source? Because if we don’t help families now, all the other money that we spent to help them will have been wasted if they lose their home.”

Mr Hunt replied: “I listen to what he says carefully, but I think he will understand that those kind of schemes which involve injecting large amounts of cash into the economy right now would be inflationary.

“So, much as we sympathise with the difficulties and will do everything we can to help people seeing their mortgage costs go up, we won’t do anything that would mean we’ve prolonged inflation.”

Treasury minister Andrew Griffith later outlined help that mortgage lenders could provide borrowers in financial trouble, telling MPs: “There is range of measures that include term extensions, a switch to interest-only payment holidays, and the FCA (Financial Conduct Authority) guidance is very clear that any repossessions – and they are currently running at a historic low – any repossessions should be an absolute last resort.”

Conservative MP for Beckenham Bob Stewart said constituents are “absolutely terrified” about rising mortgage payments and called on the Government to “redouble its efforts” on the tackling the issue.

He said: “I’m getting huge numbers of constituents coming to me about the mortgage changes. They are absolutely terrified.

“I know the Government is doing all it can but can I ask the Government to redouble its efforts because this is going to have a huge impact on the cost of living.”

Earlier, consumer champion Martin Lewis said he had previously highlighted a “mortgage ticking time bomb”.

The MoneySavingExpert.com founder told ITV’s Good Morning Britain: “I’m afraid that time bomb is now exploding.”

Mr Lewis said that if interest rates are going to be high over three or four years, people will have to readjust their finances.

Figures from Moneyfactscompare.co.uk showed the average two-year fixed-rate residential mortgage rate on the market jumped to 6.07% on Tuesday, from 6.01% on Monday.

The average five-year fixed-rate deal is now 5.72%. This is up from an average rate of 5.67% on Monday.

The choice of mortgages has also shrunk since Monday, with 4,641 residential products available, down from 4,683 on Monday.

Mr Lewis told Good Morning Britain how he had given his views during a mortgage summit held by Mr Hunt last year.

He said: “I talked about banks increasing their margins, in other words they’re putting mortgages up and they’re not putting savings up by as much, so they make more money.

“And what we really need is soft or hard political pressure right now to say to them either you make things better for mortgage holders or you make them better for savers, or best, you make them better for both.”

He added: “But we’d got a lot of the banks sitting there and nodding.

“And many of the things I suggested they argued they were already doing, like you could change your term, you could take a payment holiday, you could reduce the amount you pay temporarily, you could switch to interest-only – but the big problem for me is they haven’t made that easy.

“And what I was suggesting in that meeting is, first of all those things need to be made reversible, so you know that if you can do it temporarily you can go back without a problem. That isn’t the situation.

“And second, they need to look at minimising the impact on people’s credit scores because that puts people off taking a form of action, it scares them that they’re going to be disenfranchising themselves from other forms of borrowing for six years, but again, that hasn’t happened.

“So the ultimate result of that mortgage summit was a tiny bit more communication to borrowers.”

Two-year gilt yields rose past 5% for first time since 2008 on Monday and hit a fresh 15-year high on Tuesday, of 5.08%.

The increases add to concerns about strong wage growth and sticky inflation, helping to fuel pressure on the Bank of England to raise the base rate further on Thursday. A base rate increase would immediately push up costs for homeowners on base rate tracker mortgages.

Levelling Up Secretary Michael Gove suggested that longer-term mortgages where rates are fixed could give people certainty over their payments.

Mr Gove told the Daily Telegraph: “One of the things that is right for levelling up overall is making sure we can develop the types of products that are elsewhere in the world – particularly countries like Canada – which are long-term, fixed-rate mortgages, so you don’t get the oscillation of how much you pay every two or five years, but you have certainty over as long as 25 years on what you pay.”

Downing Street said lenders should support mortgage borrowers who are “finding it tough”.

Asked about Michael Gove’s call for 25-year fixed-rate terms, the Prime Minister’s official spokesman said: “We would encourage lenders to offer as wide a range of deals as possible, we now that there are thousands out there.

“But it is, obviously, at its heart a commercial decision for them .

“Lenders must live up to their responsibilities and support mortgage borrowers who are finding it tough.

“The biggest thing we can do as Government, is retain our focus on halving inflation.”