Lenders sign up for jobless scheme

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Lloyds Banking Group, which includes HBOS, Royal Bank of Scotland/NatWest, Northern Rock and Bradford & Bingley, all said they would take part in the Homeowners Mortgage Support scheme (HMS) immediately.

They were joined by Cumberland Building Society and the National Australia Bank Group, which includes Clydesdale and Yorkshire Bank, while a number of other lenders, including some specialist firms, said they would offer the scheme to their customers as soon as possible.

But Barclays, HSBC, Nationwide, and Abbey and Alliance & Leicester, which are both part of Santander, said they would not be taking part in the initiative, under which people who have temporarily lost their income can defer some of their mortgage interest payments for up to two years.

The groups all said they had decided not to participate in the scheme, which offers a Government guarantee if the borrower defaults on their debt, because they already offer similar or better support to customers who get into difficulties.

But it is understood that they were also put off the HMS by the limited value of the Government guarantee, given their low level of repossessions, as well as the cost and administrative burden associated with taking part in it.

The HMS is restricted to people who bought their home before December 1 last year and who are owner-occupiers.

They must have an outstanding mortgage of less than £400,000 and savings of no more than £16,000 to take part in the scheme.

They must also have a regular household income, have been making regular payments for at least five months and be able to pay at least 30% of their interest each month.

The rest of the interest will be deferred for up to two years, although homeowners will still have to repay the money once they get their finances back on track.