Further supplementary memorandum from
the Government Office for the North East (NE 08)
TAKE-UP
OF HOUSING
MEASURES IN
"REAL HELP
FOR THE
NORTH EAST"
Issue
Following the informal meeting between the North
East Select Committee and Government Office for the North East
on 16 April 2009, and your formal request for additional briefing,
I am delighted to outline below information regarding the take-up
of housing measures in "Real Help for the North East".
Background and Information
"Real Help for the North East"
published in April 2009, highlights two measures introduced in
2008 to help homeowners worried about keeping up with their mortgage
payments.
Support for Mortgage Interest
— Aimed at those not in work and pensioners,
it helps with their eligible monthly mortgage interest payments.
The scheme covers mortgage interest payments for those who have
lost their jobs and on means tested benefits, such as income support,
jobseekers allowance and employment and support allowance. However,
it only covers homes with either one person responsible for the
mortgage, or where a couple have both lost their jobs.
— Changes to the SMI scheme mean that homeowners
who have lost their jobs can claim after 13 weeks, instead of
39, and for up to the first £200,000 of their mortgage.
— The changes, which came into place at
the start of January 2009, lift the level for interest payments
from £100,000, which was set in 1995 when the average house
price was about £60,000, according to the Halifax. Mortgages
above this level will still qualify, but homeowners would have
to top up interest for the amount above £200,000.
— Budget 2009 confirmed that the Standard
Interest Rate used will be maintained at a level of 6.08% until
the end of the year. This will help in particular those borrowers
with a fixed rate mortgage—around 74% of all those with
a mortgage—whose average rates remain at 5.74%. (SMI data
is collected quarterly, and figures for November 2008 will be
available next month).
Mortgage Rescue Scheme
— The mortgage Rescue Scheme, run by Local
Authorities, has been operational across the country since January
2009, aiming to prevent some of the most vulnerable families losing
their homes and experiencing the trauma of repossession.
— To help those in priority need (including
families with dependent children, the elderly, and disabled) at
risk of repossession, who would otherwise be helped by the Council
under homelessness legislation.
— The scheme aims to support up to 6,000
households over two years. As announced at Budget we are providing
an additional £80 million of funding for the scheme and expanding
it so it is available for those who are in negative equity.
Regional information
— 14 households in the North East are in
the process of actively being considered for additional support
through the Mortgage Rescue Scheme. In addition, those who suffer
a drop in income may be eligible for the new Homeowners Mortgage
Support Scheme, which will be up and running with the first lenders
in April 2009.
— Two households in the North East are
currently in the process of benefitting (one is in North Tyneside).
An earlier case in Darlington was progressing well, but in the
end the household found a buyer and decided that was better for
them.
— County Durham goes live with Mortgage
Rescue by June 2009 at the latest, but they have been asked to
try and bring this forward.
— Northumberland have promised to make
it a priority as a result of the additional £30k they received
last month to help with impact of recession on homelessness.
— Training was provided for Local Authorities
by CLG at the end of April 2009 which should produce positive
results in the near future.
Figure 1
REPOSSESSION PREVENTION: MORTGAGE RESCUE
SCHEME MONITORING STATISTICS BASED ON INFORMATION FROM LOCAL AUTHORITIES
| Government Office Region
| Households approaching local authorities with mortgage difficulties during March 2009
| Of which households at risk of repossession AND in a priority need category
| Households applying for Mortgage Rescue during March 2009
| Households approved for Mortgage Rescue during March 2009
| Percentage of monitoring returns received
|
| North East | 57 | 14
| 2 | 0 | 81 |
| England | 1,104 | 407
| 168 | 1 | 71 |
|
