Advice NI Critical of “woefully inadequate” Support for Mortgage Interest Scheme

As the Bank of England release their latest ‘average monthly interest rate’ figures, the Support for Mortgage Interest (SMI) scheme remains frozen at 2.65%.

Kevin Higgins, Head of Policy, flagged a particular issue facing some mortgage holders:

"We are particularly worried about social security benefit claimants with mortgages who are reliant on the inadequate Support for Mortgage Interest (SMI) scheme. The interest rate used to calculate SMI is paid at a flat rate, currently 2.65%, which is woefully inadequate for benefit claimants who are on a variable rate, a tracker rate or coming to the end of a fixed rate deal.

“Despite the Bank of England’s monthly average mortgage interest rate figure published today climbing to 2.97%, the base rate now at 5.25%, and with many mortgage deals hitting 6% with some even higher, the SMI rate remains unchanged at 2.65%. This is due to the archaic formula which states that unless and until there is a + / - 0.5% shift as compared to the Bank of England’s average mortgage interest rate, then the SMI figure will remain unchanged.

“It is also worth noting that SMI is paid in the form of a loan and the current interest rate applied to the SMI loan is 3.28%, again in stark contrast to the 2.65% provided by the SMI scheme.”

To be eligible for the SMI loan, claimants usually have to be getting a means tested benefit such as Universal Credit or Pension Credit. Recent rule changes mean the qualifying period for Universal Credit claimants has been reduced from nine to three months and the zero earnings rule has been removed so that Universal Credit claimants with earnings are now eligible to claim SMI.

Over 200,000 low-income households received government help with their mortgage payments at the height of the 2008 financial crisis but this figure has plummeted to less than 12,000 today as homeowners find themselves squeezed by soaring interest rates. And the support, now in the form of a loan, being offered to those 12,000 is falling far short in many cases.

Kevin Higgins continued:

“The really worrying issue is that according to UK Finance, the collective voice for the banking and finance industry, it is estimated that there are around 800,000 fixed-rate deals ending in the second half of 2023, while around 1.6m deals are due to end in 2024.

“We are calling for immediate improvements to the SMI scheme including:

  • Abolishing the Universal Credit 3 month waiting period;
  • Tailoring SMI support to the mortgage rate of each claimant;
  • Reversing George Osbourne’s decision to make SMI a repayable loan.”




  • The Bank of England announcement is available here.
  • More information on Support for Mortgage Interest (SMI) is available here.
  • Listen to Kevin Higgins, Advice NI Head of Policy, discuss the situation facing mortgage holders here from 1.37.00