More than 80,000 people have had their mortgage help stopped according to the first official figures released since changes were made to the Support for Mortgage Interest (SMI) scheme.
The figures issued on 24 April show only 18,000 claimants out of a caseload of 103,000 have opted to continue to receive SMI under a new loan arrangement that came into force on 6 April. Those who have not taken up the loan arrangement no longer receive help with mortgage payments and risk going into mortgage arrears.
SMI had previously been paid as a free benefit covering the interest on mortgages for those claiming benefits such as Pensions Credit, Income Support and Universal Credit. However, in the Summer 2014 Budget it was announced that any payments made after April 2018 would need to be repaid when the property was sold or transferred into new ownership.
The process has been dogged by communication delays and Royal London has repeatedly called on government to delay the changes. Initial letters were sent out from July 2017 and were due to be followed up with phone conversations to allow claimants to come to an informed decision. However, the figures issued by DWP show that successful phone contact had only been made with 72,000 claimants.
Letters had been sent and telephone contact attempted for a further 27,000 claimants while no telephone contact had been attempted in the case of 4,000 claimants.
Commenting on the figures Helen Morrissey, Personal Finance Specialist said:
"We have repeatedly called on government to reconsider its approach and these figures demonstrate the point. The changes to SMI came in from 6 April and yet these figures show the government has yet to speak to some 30,000 claimants about the changes and only 18,000 have said they will take up the loan option. As it stands well over 80,000 people have now lost their mortgage support and we have no idea what strategies they have in place to meet these payments. The likelihood is that we will see people start to default on their mortgage payments. The government must put a brake on these changes to ensure these people are engaged with and helped to make an informed decision. Otherwise these people face disastrous consequences."
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About Royal London:
Royal London is the largest mutual life, pensions and investment company in the UK, with funds under management of £117 billion, 8.8 million policies in force and 3,745 employees. Figures quoted are as at 30 June 2018.