Strengthening support for home owners in current market conditions
A new £10 million package of measures to support home owners who may be facing difficulties with their mortgage, is announced today by Chancellor of the Exchequer, Alistair Darling and Housing Minister Caroline Flint. This package includes measures to ensure that financial advice and support is available for borrowers who may need it and includes an additional £9 million extra funding for face-to-face debt advice provided by third sector partners including Citizens Advice Bureau.
(Media-Newswire.com) - A new £10 million package of measures to support home owners who may be facing difficulties with their mortgage, is announced today by Chancellor of the Exchequer, Alistair Darling and Housing Minister Caroline Flint.
This package includes measures to ensure that financial advice and support is available for borrowers who may need it and includes an additional £9 million extra funding for face-to-face debt advice provided by third sector partners including Citizens Advice Bureau.
Today's announcement will also ensure:
expanded access to free legal representation at county courts throughout England for households at risk of repossession; strengthened National Housing Advice Service to provide a new comprehensive debt advice service; and more specialist training for Citizen Advice Bureau staff and local authorities on debt advice to help families get their finances back on track. This builds on the services already in place, backed by £560 million Government investment, such as face to face debt and financial advice, a national debt helpline, homelessness prevention work by every council, legal aid, and financial support for low income households who may face short-term difficulties in repaying their mortgage.
Treasury and housing ministers will meet consumer and debt advice groups next week to discuss what more can be done to help people who are experiencing difficulties with their debt repayments, including what further financial support the industry could provide.
Meeting with the Chancellor yesterday, the 6 major UK retail banks ( Lloyds, Barclays, RBS, HBOS, Abbey and HSBC ) agreed to work closely with these groups to establish how best to meet customer needs.
Repossession rates remain historically low at around a third of the rate of the early 90s, but the Government wants to also make sure that everything is being done to help households so repossession is only ever a last resort.
The mortgage industry is currently working on further improvements to its support for borrowers in difficulty including those seeking to refinance fixed rate deals, so they receive early advice and support on available options. Following a meeting with the Chancellor last month, the CML and the FLA agreed to review their voluntary arrangements, working with consumer groups, and report to Government by the end of May.
As a result of that work the government wants to see best practice guidance that will ensure:
people on fixed rate mortgages are given sufficient warning before their repayments change; banks and building societies will engage with customers early to see if they can help people who are experiencing short-term difficulties by rescheduling repayments; banks and building societies will provide advice to individuals on how they can access independent debt advice at the earliest possible stage; and repossession will only be used as a last resort. Chancellor of the Exchequer, Alistair Darling said:
"It is clear from speaking to consumer groups and the mortgage industry that borrowers may be concerned about the impact of the current market conditions on their mortgages. That is why it is vital that the Government, working with industry, offers as much support as possible both directly to those people and to the consumer advice groups who can help them in their day-to-day lives."
Housing Minister Caroline Flint said:
"We know that some borrowers are concerned about their mortgages in the current market conditions. Some lenders are now passing on interest rate cuts and we want to see the rest follow as soon as possible. But for the minority of owners who may need support and advice now, we want to ensure it is there for them in the right place and at the right time."
Notes for Editors 1. The Government currently funds over £200m of debt advice for individuals in financial difficulty:
National Debtline Citizens Advice Local CA Bureaux Financial Inclusion Fund These services may be accessed by mortgage borrowers experiencing difficulty with their mortgage repayments, but are not focused solely on mortgages.
2. The Government also provides significant support to the Money Advice Trust ( MAT ), a charity that aims to ensure that over-indebted individuals have easy access to appropriate ( preferably free and independent ) forms of debt advice.
Government contributes approximately 1/3 of MAT's budget ( approximately £8m this year ) and the private sector ( particularly financial services including the larger banks ) contributes the remainder. MAT funds The National Debtline, a free to use debt advice phone service with 110 front line staff. National Debtline served 105,000 people last year.
3. Today's announcement includes:
Strengthening the capacity and expertise of the National Housing Advice Service to provide independent expert advice for people struggling to pay their mortgage or loan. Expert knowledge of both housing law and financial regulations mean that over 80 per cent of cases could be resolved without the need for a court hearing in the first place. New arrangements with the Ministry of Justice, to ensure households at risk of repossession have access to free legal advice and representation at county courts throughout England. Such advice means that in 85 per cent of cases immediate repossession is avoided to allow other options to be explored. This is being extended to all county courts in England to ensure representation is available for all households who may need it. Joint work with mortgage lenders to improve information and support for borrowers. This includes increasing awareness that lenders may be prepared to offer reduced repayments, or mortgage breaks; early contact with borrowers coming off fixed rates to explain the options available; and making clear that lenders wish to do everything possible to avoid repossession. To support this work, the National Housing Advice Service will be drawing together the advice and support that is on offer from Government and the financial services industry, to help people take responsibility and prompt steps to address any difficulties. More specialised training for Citizen Advice Bureau staff and local authorities, to provide tailored comprehensive financial advice for consumers. Exploring the potential for reform to the Support for Mortgage Interest Scheme, to make sure it remains as effective as possible, and reaches these who are in most need of support. The scheme offers financial support to low income households who may face short term difficulties in repaying their mortgage, to help them avoid repossession. 4. Non-media enquiries should be addressed to the Treasury Correspondence and Enquiry Unit on 020 7270 4558 or by e-mail to public.enquiries@hm-treasury.gov.uk.
This Press Release and other Treasury publications are available on the HM Treasury website. For the latest information from HM Treasury you can subscribe to our RSS feeds or email service.
Media enquiries should be addressed to the Treasury Press Office on 020 7270 5238.
Release Date
This story was released on 2008-05-12. Please make sure to visit the official company or organization web site to learn more about the original release date. See our disclaimer for additional information.
