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Q&A: Help for struggling homeowners
Arrears and repossessions have seen a big jump in just three months
The government has announced an extension of assistance for those struggling with mortgage repayments.
Prime Minister Gordon Brown told the Commons that the government would provide a guarantee, allowing homeowners made redundant to defer payment of some of their mortgage interest payments.
What proportion of these payments can be deferred will be agreed between the borrower and the lender.
The eight largest lenders - HBOS, Nationwide, Abbey, Lloyds TSB, Northern Rock, Barclays, RBS and HSBC, which together provide 70% of mortgages - have agreed to sign up to the scheme.
So what are the new measures?
The Prime Minister said that people made redundant or who face a "significant loss of income" will be allowed to defer a proportion of interest payments for up to two years.
This could help families with one earner who has become redundant, a homeowner who has suffered a significant loss of overtime or people who have had to take a lower-paid job.
The BBC understands that this will be available to mortgages of up to £400,000.
The deferred payments will be added on to repayments for the rest of the term, ideally when people are able to find a new job.
The Treasury will underwrite the extra risk taken by lenders.
Eight of the largest lenders, which provide 70% of mortgages, have signed up to the scheme, the Prime Minister said.
This plan is in addition to an existing government scheme that helps those on job seekers' allowance with mortgage interest payments.
More details of the plan will be published in the next few days.
Will this halt repossessions?
No, because there will still be people who need to get out of an untenable situation, although it could have a significant effect.
Adam Sampson, of the housing charity Shelter, described it as a "simple and direct" plan, but withheld judgement until seeing the details. This could include information on who would be exempt from the scheme.
Michael Coogan, director general of the CML, was also keen to see the detail of the plan, but stressed that it should not be a charter for the "won't pay" borrower.
Ray Boulger, of mortgage broker John Charcol, said that deferring for the whole two years would see their debt increase by 10%.
If borrowers defaulted later, and the house was sold in a market where prices were falling, it is not clear whether the government would guarantee this falling value.
Is everyone happy about it?
No. There are people who have been paying for insurance for exactly this type of situation.
Controversial payment protection insurance covers mortgage repayments for those who have lost their job, and many people have been paying these premiums for years.
The insurance companies who provide these schemes are also likely to be hit.
Repossessions are a significant issue in the sub-prime market, and so far, none of these specialist lenders have signed up to the scheme. As a result, borrowers with impaired credit histories might not get this support.
Some taxpayers might also be unhappy that the government is exposing another £1bn of taxpayers' money to the scheme.
What existing help is there for people behind with their payments?
Banks have agreed that repossession must only be a last resort. They should point people to the help available from independent advisers and charities.
The CML has forecast 45,000 repossessions this year
They should also offer payment holidays and consider offers of temporary reductions in repayments.
On Wednesday, the nationalised Northern Rock bank and Bradford & Bingley said they were adopting a policy of waiting six months before repossessing any homes of their mortgage borrowers who fell into arrears.
The banks are copying the recent example of RBS NatWest, now under majority state control.
Other major lenders had previously agreed to wait three months before starting any repossession proceedings.
Is there any specific financial assistance already available?
There is financial help for people who have lost their job.
People on income support or claiming job seekers allowance (JSA) are able to apply for government money to help repay the interest on their mortgages.
In September the government said the waiting period for those on income support, or JSA, will be cut from 39 weeks to 13.
The maximum value of the mortgage on which the interest is repaid was going up from £100,000 to £175,000. In the pre-Budget report Chancellor Alistair Darling said this would rise again to £200,000.
Around 200,000 people are already claiming this benefit, known as Income Support for Mortgage Interest.
The new help is limited to two years for JSA claimants, on the grounds that they should be able to get a job within that time.
Borrowers with a spouse or partner who is working, or have savings of more than £16,000, do not qualify.
Charities had been calling for an extension to this scheme - arguably the most significant help for those struggling with repayments.
How many homes are repossessed at the moment?
Latest figures from the Council of Mortgage Lenders (CML) revealed that number of properties repossessed by mortgage lenders rose by 12% to 11,300 in the third quarter of the year.
The CML has consistently forecast that 45,000 homes in the UK will be repossessed in 2007.
The BBC's Business Editor Robert Peston revealed on Wednesday that the CML has told ministers that repossessions will rise to 75,000 next year, close to the peak of 75,500 reached in 1991.
What about the numbers in arrears?
The CML's figures gave a snapshot of the number of homeowners more than three months behind with mortgage repayments.
In the third quarter of the year, this was up by 8% on the previous three months to 168,000.
Arrears and repossessions have seen a big jump in just three monthsThe government has announced an extension of assistance for those struggling with mortgage repayments.
Prime Minister Gordon Brown told the Commons that the government would provide a guarantee, allowing homeowners made redundant to defer payment of some of their mortgage interest payments.
What proportion of these payments can be deferred will be agreed between the borrower and the lender.
The eight largest lenders - HBOS, Nationwide, Abbey, Lloyds TSB, Northern Rock, Barclays, RBS and HSBC, which together provide 70% of mortgages - have agreed to sign up to the scheme.
So what are the new measures?
The Prime Minister said that people made redundant or who face a "significant loss of income" will be allowed to defer a proportion of interest payments for up to two years.
This could help families with one earner who has become redundant, a homeowner who has suffered a significant loss of overtime or people who have had to take a lower-paid job.
The BBC understands that this will be available to mortgages of up to £400,000.
The deferred payments will be added on to repayments for the rest of the term, ideally when people are able to find a new job.
The Treasury will underwrite the extra risk taken by lenders.
Eight of the largest lenders, which provide 70% of mortgages, have signed up to the scheme, the Prime Minister said.
This plan is in addition to an existing government scheme that helps those on job seekers' allowance with mortgage interest payments.
More details of the plan will be published in the next few days.
Will this halt repossessions?
No, because there will still be people who need to get out of an untenable situation, although it could have a significant effect.
Adam Sampson, of the housing charity Shelter, described it as a "simple and direct" plan, but withheld judgement until seeing the details. This could include information on who would be exempt from the scheme.
Michael Coogan, director general of the CML, was also keen to see the detail of the plan, but stressed that it should not be a charter for the "won't pay" borrower.
Ray Boulger, of mortgage broker John Charcol, said that deferring for the whole two years would see their debt increase by 10%.
If borrowers defaulted later, and the house was sold in a market where prices were falling, it is not clear whether the government would guarantee this falling value.
Is everyone happy about it?
No. There are people who have been paying for insurance for exactly this type of situation.
Controversial payment protection insurance covers mortgage repayments for those who have lost their job, and many people have been paying these premiums for years.
The insurance companies who provide these schemes are also likely to be hit.
Repossessions are a significant issue in the sub-prime market, and so far, none of these specialist lenders have signed up to the scheme. As a result, borrowers with impaired credit histories might not get this support.
Some taxpayers might also be unhappy that the government is exposing another £1bn of taxpayers' money to the scheme.
What existing help is there for people behind with their payments?
Banks have agreed that repossession must only be a last resort. They should point people to the help available from independent advisers and charities.
The CML has forecast 45,000 repossessions this yearThey should also offer payment holidays and consider offers of temporary reductions in repayments.
On Wednesday, the nationalised Northern Rock bank and Bradford & Bingley said they were adopting a policy of waiting six months before repossessing any homes of their mortgage borrowers who fell into arrears.
The banks are copying the recent example of RBS NatWest, now under majority state control.
Other major lenders had previously agreed to wait three months before starting any repossession proceedings.
Is there any specific financial assistance already available?
There is financial help for people who have lost their job.
People on income support or claiming job seekers allowance (JSA) are able to apply for government money to help repay the interest on their mortgages.
In September the government said the waiting period for those on income support, or JSA, will be cut from 39 weeks to 13.
The maximum value of the mortgage on which the interest is repaid was going up from £100,000 to £175,000. In the pre-Budget report Chancellor Alistair Darling said this would rise again to £200,000.
Around 200,000 people are already claiming this benefit, known as Income Support for Mortgage Interest.
The new help is limited to two years for JSA claimants, on the grounds that they should be able to get a job within that time.
Borrowers with a spouse or partner who is working, or have savings of more than £16,000, do not qualify.
Charities had been calling for an extension to this scheme - arguably the most significant help for those struggling with repayments.
How many homes are repossessed at the moment?
Latest figures from the Council of Mortgage Lenders (CML) revealed that number of properties repossessed by mortgage lenders rose by 12% to 11,300 in the third quarter of the year.
The CML has consistently forecast that 45,000 homes in the UK will be repossessed in 2007.
The BBC's Business Editor Robert Peston revealed on Wednesday that the CML has told ministers that repossessions will rise to 75,000 next year, close to the peak of 75,500 reached in 1991.
What about the numbers in arrears?
The CML's figures gave a snapshot of the number of homeowners more than three months behind with mortgage repayments.
In the third quarter of the year, this was up by 8% on the previous three months to 168,000.
