Struggling homeowners given more time to pay

HOMEOWNERS who fail to meet their mortgage payments are set to avoid repossession action for at least three months.

Banks are said to have agreed not to seek to seize people's homes if they fall only slightly behind in their payments.

Lenders have been accused of being too zealous in acting against homeowners struggling to meet their mortgage bill.

Chancellor Alistair Darling is set to unveil the agreement in his pre-Budget report on Monday.

Meanwhile, Mr Darling today faced fresh pressure to end the 10p tax rate row by allocating at least an extra £1 billion to lower income families who lost out when the band was axed.

Backbenchers Frank Field and Greg Pope, who led the Commons revolt which forced ministers to find £2.7 billion for £120 payments to millions of families, have written to the Chancellor urging him to stump up extra money for people who still lost out.

"The Labour backbenchers will not abandon the poor who have still not been compensated," they said.

Mr Darling is expected to target tax cuts and extra state payments at low and middle income families and individuals.

But the Treasury and No 10 are said to be at odds over the size of the cuts as part of the "fiscal stimulus" to counter the economic downturn.

The Prime Minister is believed to be demanding major tax reductions in a pre-Christmas giveaway but Treasury officials are deeply wary of allowing borrowing to balloon.