19 December 2008 – Mortgage support changes to benefit more people

Working age people eligible for help with their mortgage interest payments, who applied under the current rules and are still serving a waiting period, will now benefit from the new rules. If they have waited 13 weeks for Support Mortgage Interest by 5th January they will be eligible for help straight away.

The Government announced a package of help for homeowners on the 2nd September and in the Pre-Budget Report which will come into effect from 5th January 2009. This included shortening the waiting time for Support Mortgage Interest from 39 weeks to 13 weeks and increasing the capital limit to £200,000. Today the Government is announcing that this new rule will also apply to people who are waiting now.

Secretary of State for Work and Pensions James Purnell said:

“We are determined to do all we can to support people during these difficult economic times. That is why we announced a package of support for homeowners. We have extended Support Mortgage Interest so that it can help even more people, more quickly.

We have made sure that as many people as possible will benefit from the increased support with their mortgage interest payments, by bringing in the new rules as soon as we can. We don’t want people who are worried about paying their mortgage to have to wait any longer than they need to for this financial help.”

Today’s announcement means that:

• People in the system who have served 13 weeks or more of their waiting period by 5 January will become entitled to SMI from that date;
• Those who have served a period of less than 13 weeks at 5 January will become entitled to SMI at the point at which they will have served a full 13 weeks;
• Those in vulnerable groups entitled to the 50% rate at or after 5 January will receive this rate until the 13 week point when they will become entitled to the full rate;
• The higher capital limit of £200,000 will also apply to these groups as well as the two year time limit for those on Jobseeker’s Allowance.

Notes to Editors

• The waiting period in Income Support (IS), Jobseeker’s Allowance (JSA) and Employment and Support Allowance (ESA) before full SMI is paid will be shortened.  This will reduce the period from 39 or 26 weeks to 13 weeks for new working age claims and change it from 8 weeks at 50% SMI to 13 weeks at full SMI for vulnerable customers;
• the capital limit for new working age claims increases from £100,000 to £200,000;
• a two year time limit on SMI for certain income-based JSA claims only, with normal linking rules applying, will be introduced.
• Additionally the Standard Rate of Interest which is used as the basis to calculate SMI has been frozen at 6.08% for the next six months for all customers including pensioners.

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