By Sven Houston
Amidst public fear of home repossesion, Gordon Brown has revealed plans that would allow people to defer mortage payments by up to two years.
The plan aims to ease the financial strain on those facing reposession and will cover mortgages up to £400,000. Home repossession numbers are predicted to hit 75,000 next year, according to the Council of Mortgage Lenders.
All eight major mortgage lenders have agreed to the deal that could allow homeowners to defer up to 100% of their payment for two years. The plan will cost the government £1 billion as they guarantee the money to the banks, should homeowners fail to make the eventual payments.
This is the latest step in Gordon Brown’s quest to provide financial stability for families during the economic downturn, and he insists the latest scheme will allow people time to get their family finances ‘back on track’.
Mr. Brown said: “The result will be more affordable monthly payments for homeowners who are needing a bridge through difficult times.”
The plan has been met with open arms by housing charity Shelter Scotland. Director Graeme Brown has urged more lenders to approve of the plan.
He said: “We echo the call to all lenders, in particular sub-prime lenders, to sign up to this commitment, which is the first step in making sure that the 75,000 households across the UK, expected to be repossessed next year, is only a prediction rather than a reality.”
In a related move, lenders Northern Rock and Bradford and Bingley have agreed to defer repossession proceedings until homeowners are six months behind on their payments. This follows the lead taken by the Royal Bank of Scotland following calls from the PM for banks to help ease the strain on homeowners.