Beckett doubt on how many homeowners will be helped

Housing minister Margaret Beckett refused to put a figure on how many households would benefit.

She reportedly suggested yesterday that just 9,000 people would avoid having to give back the keys to their homes because of the initiative unveiled by Gordon Brown.

But today she told BBC Radio 4 banks would have to decide on a case-by-case basis who would be entitled to the bailout. She also suggested the fall in house prices may soon be over.

"There are some indications, small ones, that we are getting towards the bottom," she said. And she appeared to admit the Government had encouraged irresponsible lending.

The Prime Minister stole the limelight from the Queen yesterday with the announcement of his Homeowner Mortgage Support Scheme only hours after she unveiled the Government's legislative programme.

But questions were being asked today over how many homeowners would actually benefit from the scheme which would allow people hit by a significant temporary loss in their income to defer a proportion of the interest payments on their home loan for up to two years. Mortgage experts warn there will be 45,000 repossessions this year and 75,000 next.

Conservative frontbencher Dominic Grieve said: "It's difficult to know how many people are going to benefit. Until we can get clarity we can't say 'this is wonderful', because we can't tell."

Mrs Beckett defended the initiative. "We want that group of people who at the moment don't qualify for any of the existing help to know there will be something that will help them," she said.

Stephen Noakes, mortgage director for Lloyds TSB, backed the scheme but refused to put a figure on how many people would be helped.

He stressed it aimed to help people experiencing a "sudden and temporary" drop in income, but not individuals who had "more difficulties in terms of controlling" personal finances.

Some banks were said to have given only a day's notice that the scheme was being announced and homeowners were eagerly awaiting details.

The deferred payments, which will be underwritten by the taxpayer, will be added to the outstanding mortgage debt, which the borrower will pay off when their finances improve. The move could leave the Government with liabilities of about £1billion, as it has guaranteed lenders will not lose money if borrowers are later unable to repay the debt.

Eight lenders, accounting for 70 per cent of the market, have already agreed to be part of the scheme, including Halifax Bank of Scotland, Abbey and Nationwide.

The initiative is aimed at people who temporarily lose some or all their income, such as through redundancy or reduced hours, who may not qualify for other government help. It will cover mortgages up to £400,000.

The Council of Mortgage Lenders gave the scheme a cautious welcome, saying it would need careful development with lenders and itself to ensure it was properly targeted.

The group said: "It is not a charter for 'won't pay' borrowers to avoid their responsibilities, but it will provide welcome reassurance to the vast majority of borrowers that the Government and lenders are doing all they can, in partnership, to help those customers who 'can't pay' due to a change in circumstances as we enter a recession."

The Department for Work and Pensions is also reforming income support for mortgage interest so the benefit kicks in after only 13 weeks for eligible homeowners and covers interest payments on mortgages of up to £200,000.