Print

Mortgage rescue scheme for the unemployed?

Dan Johnson

Expect a backlash this week from mortgage payment protection insurers incensed at the latest proposal being looked at by the Labour government to prevent further erosion of confidence in the housing market.

Having already angered estate agents by mooting the possibility of removing stamp duty temporarily – thereby encouraging more people to stay out of the market in the next couple of months while the government makes its mind up on the policy – housing minister Caroline Flint admitted that she was looking at a mortgage rescue scheme to help those who lose their jobs and struggle to pay their mortgage.

In a move that certainly wouldn’t encourage people to take out private redundancy cover, the scheme – one of several under investigation – would provide for interest payments to be made by the government if a homeowner became unemployed.

Who would qualify and for how long the payments would last were details that the minister was not prepared to disclose – a sure sign that the policy is at an early stage and has plenty of scope to be withdrawn after further scrutiny.

With declining revenues from VAT, income tax and other income streams linked to the overall performance of the economy, the government’s is going to face a juggling act to find the right kind of stimulus for the economy without breaking its own rules on the amount of borrowing it requires to carry out its policies.