Mortgage help expansion 'will not benefit many'

Date:Wednesday 7th January 2009
Author: Rachel Fletcher

The government's extension of mortgage help for homeowners in difficulty will not be useful to many people, it has been claimed.

Chris Jenkins, co-owner of the Homeowners Advice Centre, pointed out that only households without any income can benefit from the new measures, meaning that households do not qualify if anyone is working, even for a small salary.

"This could possibly have the effect of actually encouraging families to stop work in order to gain mortgage interest relief," he said.

Mr Jenkins also observed that the help scheme presumes an interest rate of 6.08 per cent, but sub-prime mortgage holders may have to pay ten per cent.

The measures announced in the pre-Budget report, which came into effect this week, include slashing the waiting time for Support Mortgage Interest to 13 weeks, where it had previously been 39.

In November, the Council of Mortgage Lenders said that the UK had 11.69 million mortgages outstanding in 2008's third quarter.