Question to the Department for Work and Pensions:

To ask the Secretary of State for Work and Pensions, how the interest rate will be set, following support for mortgage interest changes in April 2018.

A Standard Interest Rate (SIR) based on the Bank of England’s published monthly average mortgage interest rate is used to calculate the amount paid towards the interest on a claimant’s mortgage and / or loan. This rate is based on information from banks and building societies and reflects an average of current mortgage interest rates on UK loans. The current rate (from June 2017) is 2.61%.

Interest will be charged on SMI loans based upon the cost of gilts as published by the Office for Budget Responsibility (OBR). This rate reflects the cost of Government borrowing. The Gilt Rate Forecast for 2017-18 is 1.5% as specified in the latest Economic and Fiscal Outlook published on the 8th March 2017 by the OBR and the current forecast for 2018-19 is 1.7%.