Government mortgage schemes

There has been a mixed reaction to the latest statistics monitoring take-up of the government’s mortgage rescue scheme. Some reports have focused on the low number of households that have taken up an offer under the scheme. So far, only six households have done so, although more than 5,300 have embarked on the first stage of approaching a local authority to inquire about mortgage rescue.

Shelter criticised the low number of households taking up an offer under the scheme when the government published its latest statistics at the end of June. The homelessness charity called for a review of how successfully mortgage rescue was working. It said the scheme “has the potential to help many vulnerable home-owners to stay in their home, so it is very disappointing so few people have been accepted on to the scheme.”

Shelter continued: “Getting accepted into the mortgage rescue scheme is obviously taking considerably longer than we would want. The government needs to review the current eligibility process and tackle any issues that are preventing people from successfully taking up the scheme.”

Small scale
It should not be forgotten, however, that the scheme was only ever intended to operate on a fairly small scale, providing help for 6,000 households over two years. The circumstances of each individual case have to be carefully assessed and there are a number of stages of the process to work through, so it was always likely that progress from inquiring about the scheme to acceptance into it would take some time.

Mortgage rescue is, of course, also only one of the possible solutions available to households experiencing payment difficulty.

It is important that borrowers explore all the options, including the range of tools that lenders already have at their disposal like switching from a capital repayment to an interest-only mortgage, re-structuring their payments or extending the length of the term. And other government schemes, including help through income support for mortgage interest and the home-owner mortgage support scheme, might be more suitable for households in different circumstances.

Meanwhile, with cases of possession now rising more slowly than the number of borrowers falling into arrears, there is evidence that lenders are showing forbearance where they can and helping borrowers to work towards solving their problems, even if they do not end up in a government scheme.

Working with borrowers
Although only a handful of home-owners have accepted an offer of mortgage rescue, the much larger number of inquiries about the scheme may indicate that an increasing number of home-owners in difficulty are taking action to address their problems at an earlier stage, including discussing them with their lender.

Sometimes, borrowers have not even been in touch with their lender, despite experiencing difficulty.

Ultimately, lenders can only help those borrowers who engage with them. So, the message to borrowers in difficulty remains unchanged, and it is a simple one, talk to your lender at the earliest opportunity, and preferably before missing a mortgage payment.