Disabled people losing out as mortgage interest help is cut.

One of the less publicised benefits cuts announced in George Osborne’s emergency budget was the reduction of help with mortgage interest payments. One of the first cuts to have come into effect, from 1st October, assistance with mortgage interest fell from a set 6.08% to the Bank of England average, currently 3.67%. This months payment will reflect the interest rate on 1st August, which was 3.63%.

This assistance ( Support for Mortgage Interest or SMI) is payable to to those in receipt of means tested benefits including Income Support, Jobseekers’ Allowance, Employment and Support Allowance and Pension Credit.

The cuts in support will affect many disabled homeowners. At least 85,500 disabled people received SMI in 2009, forming 38% of total claimants (the DWP uses DLA receipt as the method of identifying if an SMI recipient is disabled).

Some will have been able to take part in schemes such as Shared Ownership, where they part own and part rent a property. Others may have become disabled since purchasing a house, and the interest help allowed them to stay in their home after becoming unable to work.

Many people in receipt of SMI pay higher interest rates than the average. The average SMI payment of £200 a month will drop to about £120 a month. Some disabled people have already reported losing upto £44 a week in help with paying their mortgage.

Another potential side effect occurs where SMI is paid as part of Income Support.  A reduction in SMI payments could lead to someone losing all of their Income Support, which is a passport benefit. This would lead to loss of access to free prescriptions, legal aid etc.

This move is a giant leap backwards for opportunities for home ownership for those disabled people who are unable to work. Many will now have to sell their house, and are likely to end up claiming housing benefit.  They may have to move from specially adapted housing to a less suitable or accessible home. They may join the many people on waiting lists for social housing. They risk losing a sense of independence, stability, and self determination and becoming wholly dependant on the state for their housing.

Further information on SMI from the DWP (pdf).

Reaction from the National Housing Federation.


5 thoughts on “Disabled people losing out as mortgage interest help is cut.

  1. Pingback: Tweets that mention Disabled people losing out as mortgage interest help is cut. « Mind In Flux -- Topsy.com

  2. Although this has affected me it was unfortunately always going to happen. The previous rate of 6.08% was artificially high and was introduced in emergency legislation when the recession fell on our heads. Previously it was based on the Bank of England base rate minus 1% (I think) and if that had continued, I’d have been paying the DWP for the privilege of having a mortgage as interest rates dropped so low.

    It should of course be based on your actual mortgage rate but that’s deemed too ‘complicated’.

    I’d like to know where the cheap mortgages are that bring the average down to 3.67% mind. Not that I could switch though as that is forbidden when you’re on income support.

    • Thankyou very much for your comment.
      Some more background to the previous rate, from the DWP: “The standard interest rate was previously set according to a formula equal to the Bank of England base rate plus 1.58%. This formula was introduced in November 2004. In recent times (since late 2008), however, the rate was frozen at 6.08% and was to remain frozen until January 2011 after which it was expected to return to the formula.”
      I hope someone in the government is monitoring how many disabled people, and others from vulnerable groups, are having to sell their homes.

  3. It is never ending this assault on the disabled and least well off, if my level of anxiety wasn’t already as high as it could get, then this would have raised it beyond tolerance.

    I’m one of those who became disabled after buying my house, my mortgage is more than 70% paid off, and I was only getting a tiny about to cover my mortgage, but I had a letter telling me I was not going to be getting anything now, not only that, but I no longer qualify for Income support either. Now, I need to still dig and find out if the Interest rate change is the culprit for this, but nothing else has changed, so until I know otherwise, I am putting my blame on this.

    Another good and topical post on this very useful Blog 🙂


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