The Spending Review report published this afternoon said government was committed to “helping homeowners facing difficulties by extending for a further year the temporary change to the Support for Mortgage Interest scheme”.
The temporary changes reduce the waiting period for new working age claimants to 13 weeks and increase the limit on eligible mortgage capital to £200,000. Both were due to expire in January 2011 and revert to a waiting period of 39 weeks and £100,000 limit on eligible mortgage capital.
The Council of Mortgage Lenders welcomed the extension said it trusted that the government will review the housing market conditions before that point and decide on whether further continuation would be appropriate.
Government estimates in the Spending Review report put the cost of SMI at £90 million over the next two years.
The CML said: “This is a modest sum in the overall scheme of public expenditure, but a reprieve that will come as a relief to those households which, through no fault of their own, lose their income and their ability to meet their mortgage obligations.
“CML members who lend extensively to the affordable housing sector look forward to engaging in developing different ways of doing things to support the expansion of private finance.
“However, the right conditions need to be in place for this to happen in the way the government envisages and this includes strong regulation as well as targeted capital investment and support for individuals through the welfare benefit system.”
