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Shapps retains Labour mortgage support – for now

And he has welcomed the support of Martin Lewis, creator of moneysavingexpert.com for the ongoing effort to encourage more struggling homeowners to seek early help and advice with their mortgage worries.

But the Minister also emphasised that the most effective thing the Government is doing to help homeowners is to tackle the record deficit and prevent the need for rapid increases in interest rates.

One of Mr Shapps’s first tasks since becoming Housing Minister has been to take a fresh look at Communities and Local Government schemes which provide help to homeowners facing difficulty in paying their mortgage, making sure they offer the best deal for them and value for money for taxpayers.

With this in mind, the Mortgage Rescue Scheme will be refocused to delivery better value for money, with a reduction in the grant rate paid to Housing Associations and tighter caps on property price and repair costs.

Using their knowledge of the needs of their communities, councils will help to deliver the scheme alongside their local housing associations to ensure that the scheme is targeted at homeowners who are most likely to benefit from it.

The longer term role for the Mortgage Rescue Scheme will be considered through the Spending Review.

Since its launch in April 2009, the Homeowners Mortgage Support Scheme has only helped 34 people although research to be published shortly shows that it has had a positive impact on lender forbearance practice and mortgage arrears management. However, given the low administrative costs, the Minister has decided that it will remain in place as a backstop scheme that maybe needed if interest rates rise. It will close as planned at the end of the financial year.

This follows the decision announced in the Budget to move support for mortgage interest paid to a rate that provides better value for money for the taxpayer, by applying the Bank of England published average mortgage rate as the standard interest rate from October.

Grant Shapps said:

"The most effective thing the Government can do for homeowners is to tackle the record deficit and avoid the need for rapid increases in interest rates. But there must still be effective help on hand for those struggling to pay their mortgages.

"So today I can confirm that the Mortgage Rescue Scheme and Homeowners Mortgage Support Scheme remain available as a last resort to homeowners facing the real threat of repossession.

"But the most effective thing anyone with money worries can do is to not bury their heads in the sand, seek early advice and speak to their lender to avoid losing their home. I would urge people to visit www.direct.gov.uk/mortgagehelp (external link), or contact organisations like Citizens Advice or Shelter for free advice on taking control of their finances."

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