Just one home rescued by £285m mortgage aid scheme

A £285 million government scheme to protect homeowners facing repossession has helped just one family so far, it emerged today.

The Government originally unveiled the Mortgage Rescue Scheme last September at the start of the banking crisis in response to fears of soaring numbers of people losing their homes.

It was part of a package of measures that the Government claimed would help 6,000 families over the next two years. The £200million scheme was this month given an extra £85million by Alistair Darling in the Budget.

But tight criteria means that only a small number of homeowners qualify for the support.

The Communities department said the scheme had been "operational across the country" since January and a spokesman said it had made a "successful start".

Figures published by the department today show that just one homeowner, in the east of England, has qualified for the assistance so far.

A government spokesman said that councils were currently looking at applications from more than 450 other families across Britain.

Shadow housing spokesman Grant Shapps said: "Thousands of families have looked to Gordon Brown for help to survive this recession and he's looked the other way. He got us into this mess and he needs to help ordinary families through it."

Under the measures, homeowners struggling with repayments would be allowed to sell a share - or all - of their property to a social landlord and rent it back. This should allow them to stay in their home without facing the trauma of being repossessed by their lender. However, the scheme has been criticised because of its qualifying criteria, which means that only a small number of homeowners will be entitled to benefit.

Homeowners will not be eligible for the assistance scheme unless they had been making regular payments in agreement with their lender for at least five months. They must also be able to afford to continue to pay at least 30 per cent of the interest on their loan each month.

They can also only take part in the scheme, which covers mortgages up to £400,000, if all other options have been exhausted, if they are not eligible for income support for mortgage interest and have less than £16,000 in savings.

The scheme is only open to owner-occupiers, not buy-to-let landlords, and people must have bought their home using a mortgage before 1 December last year.

In exchange for lenders agreeing to defer a portion of homeowners' interest payments, the Government will guarantee up to 80 per cent of the money owed to the lender.

The Council of Mortgage Lenders forecasts that there will be up to 75,000 repossessions this year, equalling the high point of the early Nineties recession.