Homeowners'Mortgage Support

Communities and Local Government written statement – made at on 21 April 2009.

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Photo of Margaret Beckett Margaret Beckett Minister of State (Department of Communities and Local Government) (Housing)

Today I am announcing that new support to help homeowners remain in their home if they fall on difficult times will now be available. Homeowners Mortgage Support (HMS) will enable eligible borrowers to reduce their monthly mortgage interest payments to affordable levels for up to two years to help them get back on track with their finances if they suffer a temporary loss of income.

This new support builds on a range of measures the Government have already put in place to ensure that repossession is only ever a last a resort.

From today, the following major high street lenders will offer their customers HMS: Lloyds Bank Group (which includes Halifax and Bank of Scotland), Bradford and Bingley, Northern Rock, the Royal Bank of Scotland (which includes NatWest and Ulster Bank), Cumberland Building Society, and the National Australia Bank Group (which includes Clydesdale and Yorkshire Bank).

A number of other banks, building societies and specialist lenders have also confirmed today that they will offer their customers HMS as soon as possible. These are Bank of Ireland (which includes Bristol and West), GMAC, GE Money, Kensington Mortgages, Standard Life Bank, and the Post Office.

Lenders offering HMS will have the security of a Government guarantee if the borrower defaults.

At the same time, four other high street lenders, Barclays (including First Plus), HSBC, Nationwide and Santander (including Abbey and Alliance and Leicester) have all confirmed today they are offering comparable arrangements to their customers, while opting not to take up the Government guarantee. Customers of these institutions experiencing a reduction in income and willing to make regular monthly payments will receive a similar level of support and be encouraged to seek independent money advice.

As a result of today's announcement, lenders covering more than 80 per cent of the mortgage market will now be providing enhanced support to their customers. Borrowers will receive independent money advice as part of these changes to help them make the right decisions for their circumstances. The door will remain open for further lenders to join the scheme, and we will be working actively with the sector to enable this.

HMS does not provide consumers with a payment holiday. The mortgage interest payments that have been deferred will eventually have to be paid back.

Households will need to seek independent money advice before signing up to the scheme to make sure they understand the consequences of participating. We have been working closely with Shelter, Citizens Advice Bureau, Consumer Credit Counselling Service, National Debtline and PayPlan to ensure they are ready to provide advice on the scheme, including making £2.5 million available for advice agencies to support the delivery of the scheme.

Homeowners Mortgage Support is part of the Government's offer of real help for homeowners who are struggling to keep up with their mortgage payments. It is the latest element of the extra support put in place for homeowners which includes:

£25 million in additional funding for debt advice services;

A new pre-action protocol which sets out guidance from the judiciary on the steps that a lender is expected to take before taking action to repossess;

For those households whose cases reach court, free legal advice or an appropriate alternative, is available across the country;

Enhancements to the Support for Mortgage Interest (SMI) support available to out of work households; and,

A new Mortgage Rescue Scheme targeted at vulnerable households.

Homeowners are also protected through FSA regulation, including the expectation of fair treatment for customers.

A final impact assessment, setting out the estimated costs and benefits of Homeowners Mortgage Support, is also being published today. This is available to download from:

http://www.communities.gov.uk/housing/buyingselling/mortgagesupportscheme/

Further information, including eligibility criteria for households and full list of lenders working with us to offer this option to households is available at: http://www.communities.gov.uk/housing/buyingselling/mortgagesupportscheme/

A consumer guide to the scheme can be found at: www.direct.gov.uk/HMS.