It appears that the Treasury is poised to extend support for low income homeowners struggling with costs and now those on universal credit will be able to apply for a loan from the Government to help meet repayments after just three months of difficulty, rather than nine.

The Government is also abolishing the “zero earnings rule” that currently applies. Previously, only those who were out of work could take out support loans under the scheme but now people in work and claiming universal credit can apply.

The changes are expected to help thousands of homeowners, with the Government earmarking £365m to lend under the scheme over the next five years.

Over 23,000 mortgage holders have taken out loans under the scheme as it stands, according to data from the Department of Work and Pensions. That number is likely to rise in the coming years as these reforms broaden access and the economic downturn pushes more mortgage holders into trouble.

The Office for Budget Responsibility (OBR) expects average interest rates on outstanding home loans to hit 5pc in the second half of 2024. Meanwhile, real household incomes are expected to shrink by 7pc over the next two years and half a million jobs will be lost, prompting more people to claim universal credit.

The loan will need to be repaid, usually when the homeowner dies, sells the property or transfers ownership.

The Support for mortgage interest (SMI) is a state support scheme that helps some homeowners cover the interest on their mortgage if they’re struggling with repayments. Here are the main details you should know about:

• SMI can help with the interest on the first £200,000 of your mortgage balance. This is capped at £100,000 if you’re receiving pension credit.
• SMI won’t necessarily cover all of the interest you need to pay. That’s because the Government doesn’t use your specific interest rate to work out how much help you’re eligible for.
• SMI is paid as a loan – meaning whatever you borrow you’ll need to repay. Plus you’ll be charged interest on your SMI loan in the meantime. SMI is paid directly to your lender. You don’t need to repay the loan until you sell your property.

From spring 2023, the nine-month wait will be reduced to three months. In addition, the zero-earnings rule will also be scrapped, meaning you will be able to be on UC and earning income from a job and still be eligible for SMI.

Jeremy Hunt also confirmed that the stamp duty cuts announced in the September mini-Budget will end in early 2025.

Hunt said that the Office for Budget Responsibility expects housing activity to slow over the next two years, “So the stamp duty cuts announced in the mini-Budget will remain in place, but only until 31 March 2025.”