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Mortgage Interest Deferral Scheme

Volume 488: debated on Monday 23 February 2009

To ask the Secretary of State for Communities and Local Government pursuant to the answer of 29 January 2009, Official Report, columns 683-84W, on the Mortgage Interest Deferral Scheme, what estimate her Department has made of the cost and take-up of the scheme; when the scheme description commenced; when each remaining stage in devising the scheme descriptors is expected to be completed; when she expects to publish the full impact assessment; and if she will make a statement. (254506)

Our intention to set up a new Homeowner Mortgage Support Scheme was announced by the Prime Minister on 3 December 2008. As part of a much wider package of real help for home owners, the scheme should enable ordinary hard-working households that experience a redundancy or significant loss of income to reduce their monthly payments to a more manageable level, by deferring a proportion of the interest payments on their mortgage for up to two years. The Government will guarantee the lender against a proportion of any loss incurred on the deferred interest payments in case the borrower defaults.

I wrote to all lenders on 18 December 2008, setting out the proposed scheme design and seeking their views by 14 January. The legal authority to pursue such a scheme was established when the Banking Act gained Royal Assent on 12 February 2009. We are now working closely with the lenders and debt advice agencies to finalise scheme design and agree plans for scheme implementation. Once discussions with the lenders to agree the scheme design have concluded, we will publish an Impact Assessment setting out the cost and anticipated take-up of the scheme. We currently expect the scheme to be up and running in the spring.