Advice NI concerned for homeowners after yet another interest rate raise

Kevin Higgins, Head of Policy, flagged a particular issue facing some mortgage holders:

"We are particularly worried about social security benefit claimants with mortgages who are reliant on the inadequate Support for Mortgage Interest (SMI) scheme. The interest rate used to calculate SMI is currently 2.65%, which is woefully inadequate for benefit claimants who are on a variable rate or coming to the end of a fixed rate deal.

“To be eligible for an SMI loan, claimants usually have to be getting a means tested benefit such as Universal Credit or Pension Credit. Recent rule changes mean the qualifying period for Universal Credit claimants has been reduced from nine to three months and the zero earnings rule has been removed so that Universal Credit claimants with earnings are now eligible to claim SMI.

“Despite the launch this week of the 'Consumer Duty' by the financial regulator (the Financial Conduct Authority), which strengthens consumer protection rules across financial services and requires firms to act to deliver good outcomes for customers, we know that many people are stressed and fearful. Given the impact of inflation and the cost of living crisis, household budgets are already stretched to breaking point.

“The really worrying issue is that according to UK Finance, the collective voice for the banking and finance industry, it is estimated that there are around 800,000 fixed-rate deals ending in the second half of 2023, while around 1.6m deals are due to end in 2024.

“We are calling for immediate improvements to the SMI scheme including:

• Abolishing the Universal Credit 3 month waiting period;
• Tailoring SMI support to the mortgage rate of each claimant;
• Reversing George Osbourne’s decision to make SMI a repayable loan;

Advice NI drew attention to the support available for people struggling with their repayments including extending the term of the mortgage, making a temporary switch to interest-only payments, a temporary reduction in repayments or taking out a part interest-part repayment plan.

For further information, or to reach a spokesperson contact Elkie Ritchie, Communications Manager, 07702846030.