Borrowers that have been unemployed for 13 weeks are currently eligible for the support, which replaced the 39-week qualifying period in 2009, and the qualifying loan size increased to £200,000 from £100,000. Both were due to revert back in January 2013.
The extension of the SMI scheme will cost an extra £10m in 2013/14, followed by £95m in 2014/15 and £90m in 2015/16.
The autumn statement report states: “Temporary changes to SMI are extended until 2015/16 for working age SMI claims. The waiting period will remain at 13 weeks and the working-age capital limit will remain at £200,000 until 31 March 2015.”
SMI used to be calculated at 6.08 per cent but in the emergency 2010 Budget it was cut by 40 per cent and since October it has been calculated at the Bank of England’s average mortgage rate, currently 3.63 per cent.
CML director general Paul Smee says: “We welcome the extension of the current arrangements for the support for mortgage Interest scheme until March 2015. These had been due to expire in January 2013 but today’s announcement provides a welcome extension of support for homeowners currently receiving income related benefits, as well as helping lenders to extend forbearance to those waiting to qualify.”