Brown defends mortgage break scheme

8:26am Friday 5th December 2008

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© Press Association 2008

PRIME Minister Gordon Brown said the Government's plan to give struggling homeowners a two-year mortgage payment holiday would make people "feel more secure in the downturn".

He said his Government wanted to "do everything we can to reassure people and to help those who are now worried about being repossessed or falling behind with their payments".

The Government also defended itself against opposition criticism that it failed to say how many people will be helped by the Homeowner Mortgage Support Scheme.

A spokesman for the Department for Communities and Local Government said: "We are not setting a limit or target for the number of households that can be helped. This is a consumer led initiative."

Mr Brown and Housing Minister Margaret Beckett have visited staff at a Citizens Advice Bureau office in Pimlico, central London, to talk with advisers who have faced queues of people worried about their finances.

Speaking shortly after the announcement that the Bank of England decided to cut interest rates once more, Mr Brown said: "I welcome the fact that interest rates have come down. Now that they have come down and petrol has come down and we are hoping that gas and electricity will come down shortly, combined with the help we are giving people I think it will help homeowners to feel more secure."

He denied reports that banks were taken by surprise by the announcement of the scheme, saying: "The eight major lenders that are responsible for more than 70 per cent of the mortgage market are fully behind the plans. We are now working on getting the remaining 30 per cent signed up."

Under the scheme, homeowners will be able to defer a proportion of the interest payments on their home loans for up to two years.

It is aimed at those who do not qualify for other Government help and lose their income either through redundancy or a reduction in their hours.

It will cover mortgages up to £400,000 but only those with less than £16,000 worth of savings will be eligible. The deferred payments will be added to their outstanding mortgage debt, which the borrower will pay off when their finances improve.