In the pre-Budget report, Alistair Darling said those in financial difficulties would be helped to stay in their homes.
He said: “Repossession must be the last resort. I am pleased to say that this has been recognised by lenders. The major lenders have agreed today where people are facing repayment difficulties; they will wait at least three months after the borrower falls into arrears before initiating repossession proceedings.
“This will give homeowners time, to work with lenders, to find a solution.
And I also welcome the commitment from lenders to explore all possible options, including accepting a minimum payment or mortgage rescue products, before and after homeowners get into difficulties.”
Darling also set out plans to spend £15m on free debt advice and to extend the Income Support for Mortgage Interest scheme to mortgages of £200,000.
“This will help ease worries for homeowners who have lost their jobs as they look for new employment,” he says.
Also for six months, the level of interest rates covered by the ISMI scheme will remain at just over 6 per cent.
Darling will also extend the existing Mortgage Rescue Scheme to cover those who are suffering as a result of second-charge mortgages.
He adds: “First-time buyer demand, and long-term housing supply, are the two essential cornerstones of the housing market.
“We will bring forward an additional £775m this year and next to invest in thousands of new and modernised social homes as well as regeneration projects.”
“It will help homeowners of today stay in their homes – and help the homeowners of tomorrow buy their first home,” says Darling.