Scots Labour leader Anas Sarwar will today unveil plans to cut mortgage bills for homeowners struggling with spiralling interest rates.
The £50m “rescue” scheme would give the Government a stake in people’s homes in exchange for lower monthly payments.
Sarwar said: “Unless the Scottish Government steps in now to give urgent support to homeowners there is a real risk that repossessions could go up and people could end up homeless.”
Rising interest rates are forcing Scots to pay thousands of pounds more a year in mortgage costs, putting huge pressure on family budgets.
Around 30 per cent of households in Scotland owned their home with a mortgage in 2020 and an end to fixed rate deals could be disastrous.
At a launch in Glasgow today, Sarwar will release a new policy aimed at stopping people from losing their homes and making bills affordable.
An existing programme, Mortgage to Shared Equity, gives the Government a stake in someone’s home. Labour believes the scheme needs to be radically overhauled and expanded to help many more homeowners.
Central to the reform is widening the house price eligibility so that it is not only the lowest value homes that qualify. Labour would also allow homeowners who have bought their houses with smaller deposits and who are rolling off their fixed rates to qualify.
Another element would be a two month turnaround for applications. The equity would be returned to the Government over time.
Sarwar told the Record: “We are in the midst of a cost of living crisis where energy prices are going up, petrol prices are up, food prices are up, and we know people’s mortgages are also going up. There is now a Tory premium on mortgages.
“If someone is coming off a fixed rate and paying an extra £500 a month, that’s an extra £6,000 that family needs to find over the course of the next year. We need an urgent scheme where people can keep their own home and get the extra support they need.”
Fear and despair is 'incredible'
Sarwar said he hoped the SNP-led Government would adopt the plan in its forthcoming Budget : "I hope the Government takes this in the spirit in which it is offered. This is a meaningful way we could use the powers we have. The level of fear and despair that’s out there is incredible.”
Labour estimates 7,400 households could be struggling with credit repayments and they claim the beefed up Equity scheme would cost £50m.
It comes after the Scottish Government announced a temporary rent freeze following pressure by Labour MSP Mercedes Villalba.
A Scottish Government spokesperson said: "We know many homeowners are struggling with rising interest rates. Our Home Owners Support Fund is the only such scheme in the UK, offering support to those on low incomes who are at risk of falling behind on their mortgages and facing repossession or eviction.
"The Fund, which includes the Mortgage to Shared Equity scheme, sits alongside other sits alongside other advice services and legal aid support. We are currently reviewing the fund, including eligibility rules.
“The Scottish Government recognises the growing pressures on family budgets and has allocated almost £3 billion in this financial year that will help mitigate the increased cost of living.”
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