Welsh Government unveils new financial support scheme for homeowners struggling to pay their mortgage

Homeowners struggling with the escalating costs of their mortgage repayments may be eligible to apply for a loan from the Welsh Government, designed to help them keep their homes amidst rising interest rates.

Named ‘Help to Stay Wales’, the programme starts today, providing interest-free loans that could amount to thousands of pounds to assist with mortgage payments for qualifying families.

The scheme seeks to offer a solid base for households earning up to £67,000, with properties valued at no more than £300,000.

This joint effort with the Development Bank of Wales comes at a crucial point, as the nation faces 12 successive interest rate increases over the past 18 months.

According to the programme details, Help to Stay Wales will operate alongside the support given by mortgage providers through the UK Mortgage Charter, targeting customers struggling to pay their mortgage dues.

The support takes the form of a loan, free of interest for the initial five years, and will be managed by the Development Bank of Wales.

The Welsh Government has allocated a £40m fund to tackle the immediate economic strains caused by the surge in the cost of living.

This step is set against projections from the Resolution Foundation, which anticipates an average annual hike of £2,900 in mortgage repayments for households remortgaging next year, alongside a 15% increase in repossession claims from April to June 2023.

Under the cooperation agreement with Plaid Cymru for the 2023-24 budget, £40 million in repayable capital funding has been approved to deploy such supportive schemes over the next two years.

Unlike many existing schemes that serve solely those already in possession proceedings, Help to Stay Wales extends its aid to those expecting financial hardship or the prospect of proceedings, proactively working to prevent homelessness and reduce the subsequent strain on local authorities.

In collaboration with various partners and sector experts, the Welsh Government has developed a scheme that promises to fill existing market gaps and strengthen its current mortgage rescue services.

To guarantee that all alternative support routes have been fully considered, the scheme requires that households have obtained advice from debt advisory services.

Those eligible will benefit from free mortgage advice, fully funded by the Welsh Government, to ensure informed decision-making and financial viability.

Minister for Climate Change, Julie James, said:

The current economic climate presents many challenges for homeowners as they face the significant rise in fuel costs, high inflation, escalating rent and house prices with incomes often not keeping pace.

The aim of the Help to Stay Wales Scheme is to help homeowners to continue living in their precious homes.

By widening our current mortgage rescue offer, we have the opportunity to help more people at an earlier stage before they face the awful threat of repossession.

I would like to thank UK Finance and mortgage lenders who are already supporting the Scheme, and I hope more lenders will be able provide their support over the coming weeks.

We will continue to do all we can with the powers we have to help protect vulnerable households through this cost-of-living crisis.

Designated Member, Siân Gwenllian said:

The detailed work undertaken through the Co-operation Agreement on the mortgage market has led to the creation of Help to Stay Wales to support people affected by soaring interest rates.

By utilising the financial institutions and the powers we currently have in Wales, we have been able to create a Made in Wales solution which will provide direct support to those facing the greatest difficulties.

This new, targeted support will help more people at an earlier stage, not just those threatened with repossession, meaning they can stay in their homes and help them avoid the stress of not being able to pay their mortgage.

Despite having limited powers and resources in this area, our hope is that the direct support being provided in Wales will provide an additional safety net to mitigate some of the worse effects of the unfairness of the conditions created in Westminster.

Chief Executive for Shelter Cymru, Ruth Power, said:

We’ve been campaigning for more support for homeowners struggling with their mortgage repayments, who are one of the many groups at risk of homelessness and seeking support from Shelter Cymru.

We welcome any initiatives that get upstream to prevent homelessness and widen the safety net for households facing a cost of housing and cost-of-living crisis. This scheme will offer eligible households assistance from the early point of arrears accruing, rather than waiting until they face the incredible stress of repossession. We must now ensure that as many households as possible have the option to use it to stay in their homes, learning from people at risk of homelessness how best such a scheme can help them.

Anyone at immediate risk of losing their home can contact Shelter Cymru’s helpline on 08000 495 495 for independent advice.

Complete guidelines on the Help to Stay Wales scheme, including detailed eligibility criteria, ca be found here: https://www.gov.wales/help-stay-scheme/how-to-apply