Channel 4 News 4Homes Rate Cuts And Repossessions | 4Homes

Date Published:: 05/12/2008

As the government urges banks to pass on the latest rate cut, it also introduces measures to help homeowners facing repossession.

Banks and building societies are coming under pressure from MPs to pass on yesterday's cut in interest rates to their customers. Some major lenders have already passed the cut on in full to customers with a variable-rate mortgage, while others have failed to - this includes HBOS, the UK's biggest lender, which is only passing on 0.25 per cent.

How Will This Affect Home Buyers?

To some extent, the base rate cut is good news, because the interest rate on a mortgage should be lower. However, that assumes that you have a large chunk of capital to pay the deposit - most mortgage deals now require 15, 20 or even 25 per cent as a down payment, while the best deals require a 40 per cent deposit.

Should You Be Buying Now Anyway?

Some analysts are still predicting that house prices in some areas could still be falling - and continue to do so for most of 2009. So, if you do buy, you need to bear this in mind. What to do? Research your local area very, very carefully. Find out what house prices have been doing - is the slump slowing where you are? Is the area up and coming and likely to gain some value generally? Is the house you're thinking of buying in need of restoration that you can do cheaply, while ensuring the value increases - or at least doesn't decrease too much? Many of these questions are unanswerable. What's happened to the housing market has been unprecedented, and therefore none of us really knows what the year ahead holds. Not sure? Wait until next summer before you jump on to the housing ladder.

What If You're Facing Repossession?

The Government have just announced a new scheme to help people who suffer a temporary loss of income stay in their home. The new Homeowner Mortgage Support Scheme will enable households that experience a significant and temporary loss of income as a result of the economic downturn to defer a proportion of the interest payments on their mortgage for up to two years.

The Government will guarantee the deferred interest payments in return for banks' pariticipation in the scheme and work with lenders over the coming days to develop the scheme in detail, with a view to it being available to customers early in the New Year. The country's eight largest banks have already pledged that they will work with the Government to develop the scheme.

More on this when it's announced.