The Homeowner Mortgage Support Scheme will enable households that experience a significant and temporary loss of income as a result of the economic downturn to defer a proportion of the interest payments on their mortgage for up to two years. The Government will guarantee the deferred interests payments in return for banks’ participation in the scheme.
The Government will work with lenders over the coming days to develop the scheme in detail, with a view to it being available to customers early in the New Year.
The country’s eight largest banks have already pledged that they will work with the Government to develop the scheme.
The Chancellor said: “This is real help for homeowners at risk of repossession through no fault of their own. The scheme will give people who face a temporary fall in their income the confidence that they need to rearrange their finances so they can come through a difficult period without losing their home.”
Housing Minister Margaret Beckett said: “We are determined to do everything possible to ensure that hard working households have the option to stay in their homes, if they suffer a loss of income during the downturn. This scheme will give households the breathing space to get back on their feet again and help ensure they do not face or fear repossession.
“It shares the risk of home ownership at this difficult time across all the partners – the Government, the lenders and the borrowers. We want to see all lenders signing up to this scheme as part of their efforts to ensure that repossession is always an absolute last resort.”
The scheme has been broadly welcomed by the industry. Joy Griffiths, Lloyds TSB managing director of mortgages, said; “It is always our priority to do all we can to help homeowners in financial difficulty. We welcome the announcement today and will continue working with the Government as the details of this arrangement are refined, including who is eligible for the scheme.”
Several banks and building societies over the past few days have said they will not repossess a property until at least six months after arrears start.
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