FactCheck: help for homeowners

Is the government helping a quarter of a million people stay in their homes? FactCheck starts turning over the stones.

The claim

"We are helping a quarter of a million people to stay in their homes by paying the interest on the mortgage if they lose their job, or by other means of helping homeowners."
Gordon Brown, monthly press conference, 22 July 2009

The background

Rising home repossessions are one spectre of the last recession that the government is keen to avoid as much as possible.

A number of schemes have been unveiled to help struggling homeowners keep a roof over their heads.

But as we've reported before, one, the Mortgage Rescue Scheme, initially attracted attention for how few families had been helped - just one in the first three months of operation.



In his monthly press conference as parliament rose for the summer recess, Brown claimed the government was helping a quarter of a million people stay in their homes by means such as paying the interest on their mortgage.

So how many homeowners is the government actually helping?

The analysis

The biggest financial help for homeowners comes from the Support for Mortgage Interest scheme. This has existed since the last recession (then called Income Support for Mortgage Interest): it's paid straight to the mortgage lender and covers the interest on a mortgage up to a certain value, paid out at a set interest rate. It goes to people claiming certain means-tested benefits - primarily income support, jobseekers' allowance( JSA), and pension credit.

In January 2009, the government changed the rules - the eligibility waiting time for new claims was cut from 39 to 13 weeks, and the mortgage amount on which interest could be claimed was extended from £100,000 to £200,000. A two-year limit was introduced for new claims by those on Jobseeker's Allowance.

According to the Department of Work and Pension's latest figures, for November 2008, around 200,000 people were claiming the benefit. Figures are not yet available to show how much impact the changes have had on the number of people claiming SMI.

The DWP said it did not expect to see a huge increase, although of course we don't yet have concrete figures. Although more people have been signing on for JSA - around three quarters of a million more since this time last year - it's not the case that they will all claim SMI too. Because SMI is means-tested, those with savings or a big redundancy payment are unlikely to qualify.

At the moment, jobseekers make up a very small proportion of those getting SMI - around 4 per cent, based on February 2008 figures. Thirty-nine per cent of claimants were receiving income support (10 per cent lone parents; 29 per cent disabled), and the majority - 57 per cent - were elderly people in receipt of pension credit.

The government has also set up two new schemes: the Homeowners Mortgage Support scheme (HMS) and the Mortgage Rescue Scheme. HMS lets people who have seen their income drop temporarily - for example, someone who has had their working hours reduced, or a family where one partner has lost their job - delay their mortgage interest payments for up to two years.

The scheme only started on 21 April, and figures are not yet available for how many families have been helped.

When the scheme was launched, the government estimated 42,000 households could sign up over two years, though we can't yet verify whether they have, or are likely to.

Finally, the Mortgage Rescue Scheme allows eligible households - those seen as having the greatest need - to sell either all or part of their home, but remain in the property paying an affordable rent. It attracted some scathing attention when it was revealed in April that only one household had got to the final stages since the scheme started in January.

The £285mn scheme is intended to help up to 6,000 families. The latest figures, released in June, show that by the end of May, a grand total of... six households had accepted an offer through the scheme. It's still early days, though.

The nature of the scheme means it will take a while to complete, and some of those who come forward will be offered different solutions. Out of 1,139 households who came forward in May 2009, 274 were referred to local authority housing options, which could include an application for the Mortgage Rescue Scheme. Five hundred and sixty-eight were referred to the lender and/or given money advice.

So let's add these up - we have around 200,000 people on means-tested benefits getting their mortgage interest paid, and the number seems likely to increase slightly, though we don't yet know by how much.

Plus we have two new schemes, which between them are estimated to help a further 48,000 or so households.

But it's still too early to say how many people have benefited from the new schemes - we don't have any figures yet for one of the schemes, and the headline figure for the other one is still pretty minimal.

We should also mention that, although it's harder to quantify, the government has also taken non-financial action, such as increased free debt and legal advice, and getting an agreement from lenders only to pursue repossession as a last resort, which may also have helped families stay in their homes.

The verdict

The government is helping around 200,000 people pay their interest on their mortgage through the Support for Mortgage Interest scheme. The vast majority of these are on income support or pension credit - not necessarily the typical profile of "people who have lost their job" that Brown indicates.

However, the scheme is open to jobseekers (on a means-tested basis), and the rules have recently been changed to make it accessible more quickly. This may lead to an increase in the number of people claiming it.

If two new government schemes pan out as planned - not something we can assess until more figures are released - then nearly 50,000 more people could receive help in paying, or deferring, their mortgage interest payments.

FactCheck rating: 2

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Every time a FactCheck article is published we'll give it a rating from zero to five.

The lower end of the scale indicates that the claim in question largerly checks out, while the upper end of the scale suggests misrepresentation, exaggeration, a massaging of statistics and/or language.

In the unlikely event that we award a 5 out of 5, our factcheckers have concluded that the claim under examination has absolutely no basis in fact.

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The sources

DWP report

DCLG - Impact Assessment of Homeowners Mortgage Support

Mortgages: government assistance

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