DANNY Alexander, the LibDem Chief Secretary to the Treasury, has raised the spectre of higher mortgage bills if Scotland becomes independent, and has challenged the SNP to spell out the impact on homeowners' pockets of leaving the UK.

On the eve of the launch of the pro-Union Better Together campaign, Alexander said a newly independent Scotland faced paying more to finance its national debt on the international bond markets than the UK, and suggested these higher costs could "pass through" into mortgages.

A rise of just 1% in interest rates would add roughly £1 billion to Scots' mortgages, he said in a media briefing this weekend.

In response, the SNP Government accused Alexander of "economic illiteracy", saying he had muddled government debt and private household debt, adding the attack showed the No campaign against independence always resorted to scare stories.

The Treasury last week launched a consultation on the Scottish Government issuing its own bonds from 2015, a devolved power which will be available to Edinburgh under the recent Scotland Act.

Although the consultation is not seeking views on an independent Scotland issuing bonds, Alexander said it "begged some important questions".

He asked: "What would be the arrangements for borrowing and finance under an independent Scotland?

"How would an independent Scotland go about raising money on the markets?

"How would it command confidence in the financial markets? What would an independent Scotland's credit rating be?"

He said: "Countries with new institutions take time to establish credibility and obviously the

question of what the interest rate would be on Scotland's debt is a

very important question. If interest rates went up by 1% that would cost families right across the UK about £10bn in extra mortgage costs.

"So it's likely the same 1% rise would cost families in Scotland up to an extra £1bn on a roughly proportionate share in terms of extra mortgage costs in Scotland.

"This is something that really matters to most families in Scotland, and something the SNP need to be much, much clearer about than they have been up to now, because one of the ways in which the UK is stronger together is that we benefit from the shared economic and financial credibility of being part of one, strong United Kingdom."

The Highlands MP repeatedly raised the SNP's failure to approach the Treasury to discuss the details of independence, but then refused to say if the UK Government would meet SNP ministers if they did seek talks.

He said: "I haven't had that approach so I'm not going to answer that question hypothetically."

It is understood UK ministers are reluctant to meet SNP counterparts in case it enhances the Yes campaign's credibility and undermines their position that voters will reject independence.

Asked about HMRC pursuing Rangers into liquidation, Alexander added: "In this case they've tried to find the balance between giving the best chance for the taxpayer to get back the money that they've owed while having a situation where football can continue, which is what fans would most want to see."

A spokesman for Finance Secretary John Swinney said: "This is economic illiteracy from Danny Alexander, which is deeply worrying considering his position in the Tory-led coalition – he has just demonstrated that he doesn't know the difference between mortgage availability in the private sector, and government bond issues.

"Banks base their mortgages on the interest rate set independently by the Bank of England, which in a sterling zone would be exactly the same for Scotland as for England.

"So much for the positive No campaign – it is over before it has even started. All that the Tory-led anti-independence campaign is capable of is unremitting and ridiculous negativity about Scotland."