Deferred mortgage interest payment scheme

Commenting on the news that some struggling homeowners will be able to defer interest payments on their mortgage for up to two years, Louise Cuming, head of mortgages at moneysupermarket.com, said: "Whilst the exact details of the scheme announced in the House of Commons yesterday remain somewhat of a mystery, in principle anything that aids homeowners who may be suffering as a direct result of the ongoing global credit crisis is a good thing.

"However, homeowners need to be aware that the interest is deferred, not written off, and they will eventually have to repay it in full. The hope is that their situation will improve and they can then afford to get back on track with their payments. But if the recession proves to be prolonged, bloody and painful, there is the danger that when the time comes to repay, they may end up losing some of the equity from their homes, which some borrowers will undoubtedly have worked hard to build up.

"You could argue that this move is nothing more than a sticking plaster as the root cause of the mortgage crisis has not been addressed at all. And before every borrower in the land breathes a heavy sigh of relief, it should be noted that this is not a ‘one size fits all' solution, as lenders will only offer this option to those they feel are capable of repaying within the allotted two years.

"I strongly believe that we need an approach that benefits those who really need help most. Lenders need to combine this initiative with proactive arrears counselling rather than outsourcing it to third parties as the majority do now. The most important thing that needs to be worked on is the relationship between lenders and their customers. We're all in this together and finding a way through this difficult period that helps both parties is absolutely vital. Continuous open dialogue will be the key and anyone who is struggling needs to get in touch with their lender and feel confident they can speak to someone to discuss their options."