In an interesting move this week, Prime Minister Gordon Brown announced moves to help people avoid repossession.
The moves include homeowners being able to defer part of their mortgage interest for up to two years. The exact portion to be deferred would be agreed with the mortgage lender but could be up to 100 percent.
It is believed the scheme will cover mortgages worth up to £400,000 and include allowing customers to switch from repayment to interest only as well.
It is estimated that the scheme could help up to 9,000 families and the government believes that there is a more widespread fear of repossession than could actually face it and it is this fear they want to dispel more than anything.
Brown also revealed that Northern Rock and Bradford & Bingley are following the lead set by the Royal Bank of Scotland and have promised to defer chasing mortgage holders until they are six months in arrears.
This new government plan is effectively an insurance plan as the government will underwrite any interest payments, which should be paid in full at a later date. The plan is designed to help those who may suffer a loss of income or who lose their jobs and to give them some more breathing space if they face repossession, whilst boosting the economy.
Both HBOS and Lloyds TSB are said to have committed to the plan, although spokespersons for both banks confirmed they had yet to see the full detail.