Struggling homeowners’ support extended

Homeowners facing repossession or struggling to meet mortgage payments after losing their jobs will continue to receive extra support from the government following today’s pre-Budget report.

The government has said it will freeze the standard interest rate used to calculate its Support for Mortgage Interest (SMI) at 6.08 per cent for a further six months.

It said the SMI scheme has benefited around 220,000 homeowners.

From April this year, the government said it would cover the monthly interest due on mortgages of up to £200,000 for borrowers who have been out of work for three months and were having difficulty meeting their payments.

Previously it only offered support to homeowners with mortgages of £100,000 or less.

Ray Boulger of John Charcol, the mortgage brokers, said the government has given members of the SMI scheme a “bonus” over and above meeting their mortgage interest.

“The majority of people who are benefiting from this scheme are going to have a rate of below 6.08 per cent. The amount that is being paid by the government each month is more than the payments would be on a repayment mortgage. It does seem to be very generous to keep paying a rate of 6.08 per cent for the next six months,” he said.

The government said once the freeze ends, it would move towards a “fairer, more affordable approach”, that more closely reflected mortgage interest rates.

Melanie Bien of Savills Private Finance said: “Any assistance that keeps struggling homeowners in their homes is to be welcomed so the extension to the Support for Mortgage Interest scheme for a further six months for the unemployed is great news.”