Homeowners need more support as furlough winds down
Lender organisations UK Finance and the Building Societies Association are calling for more support for homeowners with the furlough scheme set to end in just two weeks.
The trade bodies said important changes need to be made to the Support for Mortgage Interest (SMI) scheme to help struggling homeowners in the coming months.
What is the Support for Mortgage Interest (SMI) scheme?
SMI is a government loan scheme which helps homeowners who are in receipt of benefits, but they need to wait 39 weeks to claim, during which time their financial situation may become so difficult that they are unable to remain in their home.
Cutting the waiting time to claim would help homeowners when they need it most.
UK Finance and the BSA are also calling on the government to allow people on Universal Credit to claim SMI if they are working on reduced hours.
They claim that these changes would have a huge impact on homeowners with only a limited affect on the public purse, since SMI is a loan not a benefit.
Paul Broadhead, head of mortgage and housing policy at the BSA, said: “With the end of the furlough scheme only days away, there is a likelihood that unemployment will rise. Without urgent modification of the SMI scheme the risk of home repossession could become a reality for many despite the best efforts of lenders.
“Without the reforms, we expect more government funding will be required for the provision of housing benefits for former homeowners who were unable to get the financial support they needed, when they needed it.”
Jane Tully of the Money Advice Trust, the charity that runs National Debtline, added: “With furlough ending on 1 October and with many people facing the risk of unemployment and reduced hours, accessing support through Universal Credit and Support for Mortgage Interest will be crucial.
“However, for homeowners struggling to meet mortgage payments, the 39 week wait for help from SMI, risks the build-up of arrears and potential home repossession.
“Mortgage borrowers caught at the sharp end of the impact of Covid, need the Government to act now by reducing the wait for SMI to 13 weeks and changing the earnings rules under Universal Credit to ensure they can access the vital support they need.”