Support for Mortgage Interest Changes

NASA_2

tcr wrote: »

Good find.

I disagree a bit with Shelter. Jobcentre Plus isn't resourced to re-assess its entire mortgage casework once a month. Nor can it possibly revert to a system of paying interest at the customer's own interest rate ... the staff for that just don't exist (that was tried before and abandoned due to its administrative complexity).

But I agree with you (and Shelter), many people on the mortgage direct scheme will be disadvantaged by this change, the ones who didn't borrow from a mainstream lender. And those lenders are also amongst the worst when it comes to imposing punitive penalty charges for late payment etc.

This change will prove "difficult" for many people.

Not least staff tasked with administering it.

I think there are about 3/4 people dealing with all the mortgage cases for Northern Ireland where I work. Are they going to be able to cope?

mumofjusttwo

Thank you DMG.

Well that is lower than the rate I have at the moment on my mortgage so I will just have to wait and see.

Will have to find a job as at present on IS but DD will be 5 soon.

[Deleted User]

Thanks for that DMG i missed the detail in the budget,if there was any.

The good news is that on the whole SVR mortgages from most lenders(excluding intro deals one hopes)are far higher above base rate than they were 10 years ago(for a variety reasons),I suspect but cant confirm that the B of E average is now above 4.34% as generally standard mortgage rates(and fixed rates for that matter)have been moving upwards in the last few months.
To put this in context from Oct if smi rate is reduced to 4.5% the effect on a 100k mortgage would be £30 a week less benefit,a rate of 5% would see the same cost increase by £20 a week and a rate of 4% would mean £40 a week less.
For many families this could prove to be the straw that breaks the camels back.
It would be interesting to find out how often the B of E publishes the "average" interest rates?

[Deleted User]

NASA wrote: »

Not least staff tasked with administering it.

I think there are about 3/4 people dealing with all the mortgage cases for Northern Ireland where I work. Are they going to be able to cope?

wont it be a case of pressing a button to make the change,once the system had been re-set?

anmarj

woodbine wrote: »

wont it be a case of pressing a button to make the change,once the system had been re-set?

no, they run scans to idenify the cases where smi is, issue a case control for it to mature and hopefully somebody might be in the case to clear the download and make the change, especially on PC as you then have to change codes to show the smi not payable to the lender but to the customer when you go from Guraranteed credit over to savings credit. They may arrange for teams to be set up within each of the centres to do this. we were all set to have a housing cost team, which is not going ahead but then they could change their minds after this.

IamGullible

dmg24 wrote: »

The last figure I could find was 4.34%, but that is nearly a year old. If anything I would guess that rates are marginally lower since then.

A figure of 3.67% as the current BoE average mortgage rate has been quoted somewhere else on this site.
The BoE website has the rates for fixed, discounted, svr, and trackers, but I couldn't find an overall average mortgage rate. It's not clear whether people entiltled to SMI would be paid differently according to the kind of mortgage one has, eg fixed, tracker etc, or a uniform rate would be applied.

NASA_2

woodbine wrote: »

wont it be a case of pressing a button to make the change,once the system had been re-set?

As anmarj has stated, its not that easy, you need to re-assess the claim again by 'running through' the claim. This is required on each and every claim.

Miss it by a day and overpayments/underpayments occur causing more administration.

Factor in staffing reductions and its a strange decision to have made on a practical level. The computer systems are fairly archaic.

andyandflo

Ummm I seem to understand all of this, but could somebody tell me that if the Government has been paying at the old rate since 2008, which to be honest is way over what the norm is (my rate is 4.6% fixed for 15 years from 2007), what has been happening to the overpayments that must have been made. Given that they would not pay any arrears on the account nor would they pay the capital element, have the banks been returning the excess to the Government?

Or has everybody been keeping quiet and have actually been having the arrears/capital paid? If they have, then there can be no reason to complain of any shortfall now!!!

I am on Pension Credit now but they have refused to pay ANY of the interest as the mortgage was NOT used to purchase our home. My father loaned me the money to buy the property because the bank were too slow in getting the advance letter out and I was in danger of losing the property to another buyer. Two weeks after the house was purchased, I received the mortgage offer and obtained the advance which went straight back to my father!!!

NASA_2

andyandflo wrote: »

Ummm I seem to understand all of this, but could somebody tell me that if the Government has been paying at the old rate since 2008, which to be honest is way over what the norm is (my rate is 4.6% fixed for 15 years from 2007), what has been happening to the overpayments that must have been made. Given that they would not pay any arrears on the account nor would they pay the capital element, have the banks been returning the excess to the Government?

Or has everybody been keeping quiet and have actually been having the arrears/capital paid? If they have, then there can be no reason to complain of any shortfall now!!!

I am on Pension Credit now but they have refused to pay ANY of the interest as the mortgage was NOT used to purchase our home. My father loaned me the money to buy the property because the bank were too slow in getting the advance letter out and I was in danger of losing the property to another buyer. Two weeks after the house was purchased, I received the mortgage offer and obtained the advance which went straight back to my father!!!

The excess payments were, and are still, going to the lenders.

ETA: There is actually a short DMG memo on the subject - http://www.dwp.gov.uk/docs/m-26-10.pdf

andyandflo

NASA wrote: »

The excess payments were, and are still, going to the lenders.

ETA: There is actually a short DMG memo on the subject - http://www.dwp.gov.uk/docs/m-26-10.pdf

Thanks NASA for that link - it answers my question perfectly.

So it seems that for upwards of two years at least the Government whilst saying that they will not make payments to cover arrears or capital, this has in fact been happening!!!!

So those with interest rates at say 4% have been having not only the interest paid but another 2%+ of the outstanding capital as well.

And they are now complaining that they will lose this advantage!!!!

Poor souls