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Leading Banks Pull Out of Mortgage Scheme

Wed, 22 Apr 2009

Some of the UK's leading banks have refused to take part in a government-backed mortgage scheme designed to help homeowners avoid repossession . High street lenders such as Barclays, HSBC, Nationwide and Santander's Abbey and Alliance and Leicester have decided against joining the scheme, despite being involved in the initial stages of developing the scheme when it was announced in December 2008. Half of the banks who helped set up the Homeowners Mortgage Support Scheme have since opted out of making it available to borrowers .

The withdrawals mean that the government's initial claim that 70 per cent of the mortgage market would be involved in the scheme no longer holds true. The main lenders to remain involved in the scheme as those which the government and Bank of England have bailed out - including Bradford and Bingley, Lloyds TSB and Northern Rock . Indeed, the Conservatives have suggested that less than half of the mortgage market is involved in the scheme.

The news following the long awaited introduction of the scheme yesterday, five months after it was announced. Homeowners will be able to defer their interest payments for up to two years under the scheme.
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