Mortgage safety-net is cut
Thursday 01 December 1994
The measures, announced by Peter Lilley, Secretary of State for Social Security, caused a furious political row. Donald Dewar, his Labour opposite number, said the effect on existing borrowers was ''tantamount to a sentence of homelessness''. Mr Lilley accused Mr Dewar of scaremongering and said it was perfectly reasonable that the initial costs should be met ''by the insurer, the lender or the borrower and not by the
At present half the interest on home loans is paid for 16 weeks, and then all of it. From October, new borrowers will get no benefit at all for the first nine months. Existing borrowers will receive no help for two months and only half the interest for the next four months.
Mr Dewar protested the changes ''bring to many people the threat that if they lose their jobs they will also lose their homes''. Lenders said the insurance cost to new borrowers was likely to be pounds 7 per pounds 100 paid monthly. However, Malcolm Tarling, of the Association of British Insurers, warned that people on fixed-term contracts and the self-employed are often refused cover.
And mortgage lenders threatened to end their ''softly softly'' approach to repossessions. They agreed in December 1991 that they would be patient with borrowers in difficulty as long as the Government continued to offer help in paying interest on the mortgage direct to the lenders.
But last night Adrian Coles, director general of the Building Societies Association, said lenders would have to look again at the agreement. He said the Government was watering down support for owner-occupiers. ''They are baling out. It is offensive. They are removing the safety-net. Vulnerable groups will suffer.'' Repossessions have fallen from a peak of 39,000 in the second half of 1991 to 25,000 in the first half of this year.
Yesterday's package of measures designed to cut social security payments to home-owners also includes a cut in the limit for payments from pounds 125,000 to pounds 100,000, and the use of a standard interest rate on which mortgage payments will be based.
Gary Marsh, housing economist at the Halifax Building Society, said lenders feared that if the standard rate was lower than the rate charged, borrowers would get deeper and deeper into debt.
''It is really quite worrying. The 16 weeks were bad enough.''
Shelter, the housing charity, called the decisions appalling. It said ministers were telling all home-owners to take out private cover. ''Some will not be able to afford to do this because they are too high-risk.''
Mr Lilley argued that some mortgage companies might insure all their clients
- 1 Katie Hopkins attacked me on Twitter — so I reported her to the police for inciting racial hatred
- 2 Martha Stewart accuses Snoop Dogg of 'smoking for four hours' during Justin Bieber Roast
- 3 I might be an MP, but that doesn't stop me fighting sexism with my breasts
- 4 Google April Fools': company unveils backwards search engine and huggable digital assistant
- 5 April Fools' Day 2015: The best hoax news stories from around the internet
University of Cambridge: Remains of 1,300 scholars are found under building
April Fools' Day 2015: The best hoax news stories from around the internet
April Fools' Day 2015 live: The best pranks and fake stories from around the world
Turkey power cut: Prime Minister says nationwide blackout could be caused by terrorists
Jeremy Clarkson 'could be given minder' ahead of a potential Top Gear return
Ukip supporters are 55 or older, white and socially conservative, finds British Social Attitudes Report
Street preacher quoting from the Bible fined for calling homosexuality an 'abomination'
Woman filmed launching racist tirade against men on the Tube for speaking in 'own lingo'
Katie Hopkins attacked me on Twitter — so I reported her to the police for inciting racial hatred
The West has it totally wrong on Lee Kuan Yew
David Cameron calls Labour 'hopeless, sneering socialists' while announcing 7-day NHS plans
Negotiable: Ashdown Group: The Ashdown Group has been engaged by a highly resp...
Negotiable: Recruitment Genius: You will also work alongside their seasoned sa...
£15000 per annum: Recruitment Genius: Are you looking for your first step into...
£25000 - £40000 per annum: Recruitment Genius: This innovative company working...