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Tories want mortgage plan details Tories want mortgage plan details
(about 4 hours later)
The Conservatives are demanding more details about the government's plan to help people in danger of having their homes repossessed. The Conservatives say they want more details about the government's plan to help people in danger of repossession.
The housing minister, Margaret Beckett, has estimated around 9,000 homeowners would benefit from the scheme. The housing minister Margaret Beckett has estimated about 9,000 homeowners would benefit from the scheme but told the BBC it would not protect everyone.
The Council of Mortgage Lenders estimates there could be 75,000 repossessions next year.The Council of Mortgage Lenders estimates there could be 75,000 repossessions next year.
Under the government's plan, people could defer part of their mortgage interest payments for up to two years.Under the government's plan, people could defer part of their mortgage interest payments for up to two years.
Conservative front bencher Dominic Grieve said: "The difficulty with the government's proposals is that it's very difficult to know how many people are going to be benefiting.Conservative front bencher Dominic Grieve said: "The difficulty with the government's proposals is that it's very difficult to know how many people are going to be benefiting.
"Until we can get clarity we can't really come out and say "this is wonderful," because at the moment, quite frankly, we can't tell." "Until we can get clarity we can't really come out and say 'this is wonderful', because at the moment, quite frankly, we can't tell."
Breathing spaceBreathing space
The plan is designed to give extended breathing space to those who lose their jobs or suffer a big cut in income, if they are facing repossession.The plan is designed to give extended breathing space to those who lose their jobs or suffer a big cut in income, if they are facing repossession.
The scheme will cover mortgages worth up to £400,000, the BBC understands.The scheme will cover mortgages worth up to £400,000, the BBC understands.
What's happened today is that the prime minster has made it less of a financial strain for the bank to leave the slightly stretched in their home Robert Peston Read more from Robert PestonQ&A: Mortgage planReaction to help plan
The lender and homeowner will agree on the proportion of payment to be deferred, but it could be up to 100%.The lender and homeowner will agree on the proportion of payment to be deferred, but it could be up to 100%.
Mr Brown made the announcement during a House of Commons debate on the Queen's Speech.
The prime minister told MPs the eight major mortgage lenders had signed up to the plan, which will start early in the new year and is meant to cut the risk of homes being repossessed.The prime minister told MPs the eight major mortgage lenders had signed up to the plan, which will start early in the new year and is meant to cut the risk of homes being repossessed.
It comes amid predictions repossession numbers could rise to 75,000 next year.It comes amid predictions repossession numbers could rise to 75,000 next year.
'Clever scheme' Mrs Beckett told BBC Radio 4's Today programme the scheme did not mean no-one would lose their homes.
Mr Brown said: "Hardworking households that experience a redundancy or significant loss of income as a result of the downturn will be able to defer a proportion of their interest payments for up to two years while they get their family finances back on track." No guarantee
What's happened today is that the prime minster has made it less of a financial strain for the bank to leave the slightly stretched in their home Robert Peston class="" href="http://www.bbc.co.uk/blogs/thereporters/robertpeston/2008/12/repossession_bailouts.html">Read more from Robert Peston class="" href="/1/hi/business/7763378.stm">Q&A: Mortgage plan class="" href="/1/hi/uk/7763692.stm">Reaction to help plan "Sadly there will be some people who perhaps have second charges and so on which take them into a field where even the help we can give, substantial though it may be, won't be enough to save them," she said.
In a separate move, he announced government-owned lenders Northern Rock and Bradford and Bingley had followed RBS's lead in agreeing that repossession proceedings would not begin in any case until households were six months behind on their payments. "We can't guarantee everybody but we are trying to help the hard working person who wants to pay their mortgage, who isn't trying to default but is really struggling."
He urged other "responsible banks" to follow their lead. She said some people, faced with the threat of repossession, "kind of shut down and don't talk to anybody until it's too late" - the government wanted to encourage them to talk to their lenders.
The government said it hoped the moves would not just reduce the number of homes repossessed but would reduce the widespread fear of repossession as well. class="lp" href="http://news.bbc.co.uk/1/hi/talking_point/default.stm">HAVE YOUR SAYThose of us that lose our jobs won't be entitled to help with the rent, because of our hard earned savings, and those of us that keep our jobs now have to pay the mortgages of those that took the gamble to buy and lost. Richard, Worcester class="" href="http://newsforums.bbc.co.uk/nol/thread.jspa?forumID=5742">Send us your commentsThere was "clearly a terrible fear out there of people losing their homes" which was understandable, but not "justified to that degree".
BBC business editor Robert Peston said it was a "clever" scheme and "most banks will give it a go because they don't want to be seen to be turfing people out of their homes". The scheme would make it "more in the interests of lenders to be more generous and understanding".
However, he indicated some banks did not believe it would have much of an impact. Asked again how many people would take it up, she said it was "genuinely quite hard to judge" - having earlier said an estimate from lenders suggested it would be only 9,000 homeowners.
The full details of the scheme have yet to emerge, but it is understood the government will underwrite interest payments, which will then have to be repaid in full at a date to be agreed with the lender. "It's very much on a case by case basis," she added.
Housing minister Margaret Beckett said an estimate from the lenders involved suggested the scheme could benefit about 9,000 families. Repossession delay
"There are probably more people fearful of their home having to be repossessed than could actually face it," she told BBC Radio 5Live. "It is that fear we want to ease." She said it was aimed at people who were not eligible for other forms of government help, such as income support, as they had not lost their jobs but, for example, their partner had and they were struggling with repayments.
Insurance scheme People could also convert a repayment mortgage into an interest-only loan to take advantage of the scheme.
The scheme could help a two-income family where one earner has become redundant, a homeowner who has suffered a significant loss of overtime or people who have had to take a lower-paid job, Downing Street said. On Wednesday Mr Brown also announced government-owned lenders Northern Rock and Bradford and Bingley had followed RBS's lead in agreeing that repossession proceedings would not begin in any case until households were six months behind on their payments.
People could also convert a repayment mortgage into an interest-only loan to take advantage of the scheme, Mr Brown's official spokesman said.
The plan is designed to boost the wider economy, with a government source describing repossession as "a small risk of something disastrous happening to you" which had a major effect on confidence.
As always with Gordon Brown, don't just look at the headline, look at the detail George OsborneShadow chancellorAs always with Gordon Brown, don't just look at the headline, look at the detail George OsborneShadow chancellor
Currently, those on benefits have their mortgage interest payments covered for two years if their mortgage is below £200,000.Currently, those on benefits have their mortgage interest payments covered for two years if their mortgage is below £200,000.
The government's plan is effectively a government mortgage insurance scheme, which will work by the Treasury underwriting the extra risk that banks take.The government's plan is effectively a government mortgage insurance scheme, which will work by the Treasury underwriting the extra risk that banks take.
The banks will not need any extra capital to cover the extended risk of people defaulting on their mortgages.The banks will not need any extra capital to cover the extended risk of people defaulting on their mortgages.
The theory, therefore, is that the move will not reduce the funds available for other borrowers.
In the worst-case scenario, it is thought the government would be exposed to £1bn in risk, with the cost to the taxpayer likely to be about £100m, government sources suggest.In the worst-case scenario, it is thought the government would be exposed to £1bn in risk, with the cost to the taxpayer likely to be about £100m, government sources suggest.
Question of detailQuestion of detail
BBC business editor Robert Peston said it was a "clever" scheme and "most banks will give it a go because they don't want to be seen to be turfing people out of their homes".
However, he indicated some banks did not believe it would have much of an impact.
Shadow chancellor George Osborne said he would not comment until he had studied the announcement, which was not in the Queen's Speech, more fully.Shadow chancellor George Osborne said he would not comment until he had studied the announcement, which was not in the Queen's Speech, more fully.
"As always with Gordon Brown, don't just look at the headline, look at the detail," he said."As always with Gordon Brown, don't just look at the headline, look at the detail," he said.
The Tories said later that two banks said to be committed to the plan - Lloyds TSB and HBOS - had not yet agreed to the details of the scheme.The Tories said later that two banks said to be committed to the plan - Lloyds TSB and HBOS - had not yet agreed to the details of the scheme.
HAVE YOUR SAYThose of us that lose our jobs won't be entitled to help with the rent, because of our hard earned savings, and those of us that keep our jobs now have to pay the mortgages of those that took the gamble to buy and lost. Richard, WorcesterSend us your comments
Lloyds TSB spokesman Stephen Pegge said the plan was "welcome" as part of range of measures to help homeowners but confirmed it had not seen the details yet.
"We want to work with the government to make sure this will really work," he told Channel 4 News.
An HBOS spokesman said the bank was "committed to working with customers who are experiencing financial difficulty to help them stay in their own homes" but needed to work through the detail of the initiative with ministers.
Liberal Democrat treasury spokesman Vince Cable said he believed the plan would be a "positive step" in helping to slow down the repossessions process.Liberal Democrat treasury spokesman Vince Cable said he believed the plan would be a "positive step" in helping to slow down the repossessions process.
But he warned that people must study the small print to see who would benefit and what knock-on effect the plan would have on banks' wider lending policies.But he warned that people must study the small print to see who would benefit and what knock-on effect the plan would have on banks' wider lending policies.
Queen's speech
The Council of Mortgage Lenders (CML) said on Wednesday that it estimated repossessions would rise sharply to 75,000 next year, as many as during the peak of the last recession in 1991.The Council of Mortgage Lenders (CML) said on Wednesday that it estimated repossessions would rise sharply to 75,000 next year, as many as during the peak of the last recession in 1991.
The CML believes repossessions, already rising steadily, will hit 45,000 this year.
In the Queen's Speech, the government said fighting the economic downturn was its "overriding priority" for the year ahead.
In a slimmed down legislative programme, it unveiled proposed legislation aimed at preventing another banking crisis and protecting depositors.
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