Homeowners Mortgage Support scheme

[T]he Homeowners Mortgage Support scheme ... will allow borrowers with mortgages up to £400,000 to take a payment holiday if they have suffered an “income shock”, such as losing their job or having their hours cut.

It is expected to announce today that the scheme will allow borrowers to defer payments on up to 70 per cent of their mortgage interest for up to two years. The repayments of a borrower in the scheme with a £150,000 mortgage at 3.5 per cent interest would fall from £437.50 to £131.

The Government will also pledge to guarantee 80 per cent of the deferred payments if borrowers fail to cover their mortgage payments and subsequently lose their homes. If the repossessed property is sold at a loss, the lender will claw back money from the Treasury.

So in effect, you pay interest on the interest. If you are already in negative equity then it will push you further down in trouble. Either way the bank doesn't lose, you pay the interest back to the government, or if the unthinkable happened the mortgage lender can get back money from the government if they sell your repossessed house at a loss.

It's a win-win, just for who? The whole article from The Times is here.