Some of the government support systems put into place to help homeowners from going into repossession are being reduced. With the latest data showing that 2^nd quarter repossessions and mortgages in arrears had dropped, it is evident the support was helpful. The government however needs to make cuts.

One of the programs is being cut due to the potential of abuse of the system. The Support for Mortgage Interest, which is paid to those on income-related benefits, is paid regardless of how much the mortgage interest actually is. So if the mortgage is lower than the payout to the homeowner then there is a surplus of government funds left over to the homeowner.

The government has announced it is cutting the rate paid to 3.75 per cent beginning October 1. The rate is based on the average mortgage rate provided by the Bank of England.

Debt charity, Consumer Credit Counseling Service (CCCS), said the rate deduction would cause a shortfall for those paying higher mortgage rates. Typically those with bad credit pay higher rates, and many of those are already having severe problems staying afloat so the cut could have a major impact.

Malcolm Hurlston, chairman of CCCS, said: "The cut in Support for Mortgage Interest will make it harder, and in some cases impossible, for many people to stay in their homes."

Shelter warned earlier this year that a rise in interest rates would make more than five million homeowners unable to afford their mortgages.

A spokesman for the Department for Work and Pensions said: "We’re changing the rate at which we pay Support for Interest because currently over 90 per cent of people are getting more than they actually pay out in mortgage interest each month - this is unfair to the taxpayer and not a good use of public funds.

"Using the Bank fo England rate will ensure that people still get the help they need with their mortgage interest payments."