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November 25, 2008    

Chancellor eases the way for mortgage borrowers in arrears

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by Gill Montia
Chancellor eases the way for mortgage borrowers in arrears

The pre-budget report presented yesterday by Chancellor of the Exchequer, Alistair Darling, contained good news for homeowners who are falling behind with their mortgage repayments.

Lenders have agreed to delay action against borrowers who are in arrears and will not begin repossession proceedings for at least three months.

The undertaking comes alongside an existing agreement under which mortgage providers are obliged to explore a range of options, such as payment holidays and altering the terms of a mortgage, before resorting to repossession.

In addition, from 5th January 2009, some homeowners who become jobless will receive help with mortgage interest payments after 13 weeks rather than 39 weeks and the maximum loan size to qualify for such assistance will rise from £100,000 to £200,000.

The government also has plans to provide guarantees for securities backed by new mortgages, as a temporary measure that could free up lending and nudge the UK housing market closer to recovery.

However, any such provision would need the approval of the European Commission.

Finally, social housing needs are being addressed by a cash injection of £775 million, which will be used for new homes and regeneration schemes.

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