The Royal Bank of Scotland yesterday pledged to give struggling homeowners a six-month period of grace before launching repossession action, prompting calls for other lenders to �raise the bar�.

CATHERINE FEGAN and ROBBIE DINWODDIE

The Royal Bank of Scotland yesterday pledged to give struggling homeowners a six-month period of grace before launching repossession action, prompting calls for other lenders to "raise the bar".

As MPs put pressure on banks and lenders to follow the lead, the Scottish Government is refusing to amend repossession laws in line with England.

RBS, which includes NatWest, said it was doubling the three-month period it currently offered to borrowers who fall behind with mortgage repayments.

The move comes on the first business day after the UK government took majority control of the bank after buying a 58% stake for £15bn, effectively bringing it under state control.

Bank of England figures released yesterday show that mortgage approvals dropped to just 32,000 in October, 1000 fewer than in the previous month. Approvals have slumped by 74% in the past year under the impact of the global credit crunch which has forced banks and building societies to ration their mortgage lending.

Scottish Secretary Jim Murphy welcomed the announcement by RBS and urged other lenders to pass the guarantee on to their customers.

"This is a welcome move by RBS," he said. "We recognise that the global credit crisis will have left some home owners facing a particularly tough time and this will give those households some vital room to manoeuvre.

"I now hope more lenders will follow RBS's lead and also do as much as possible to help borrowers in other ways by passing on - in full and promptly - cuts in interest rates and by beginning lending again to help get the economy moving."

Housing charity Shelter praised yesterday's move, saying it was an important step towards helping thousands of people to keep their homes.

Shelter chief executive Adam Sampson said: "RBS has raised the bar for other lenders who must now follow suit to ensure that all homeowners benefit from the same protection from repossession."

Britain's biggest mortgage lender Halifax said it was looking at the initiative, but added it already had a comprehensive programme in place for borrowers who got into financial difficulties.

Lloyds TSB said in general borrowers were at least six months in arrears before it began repossession action, adding that on average properties were not taken over until at least 12 months after payments were first missed.

Nationwide said its current policy of not issuing legal proceedings for arrears until after three months of defaulting on payments would not be changing.

Nationalised bank Northern Rock said on average homeowners were at least 15 months behind with payments before properties were repossessed, with less than 1% of repossessions happening when people were less than six months in arrears.

Clydesdale Bank said no personal banking customer in mortgage arrears for any less than six months in total would lose their home. The RBS announcement came as the Scottish Government rejects calls from Labour for new measures to tackle house repossessions.

Deputy First Minister Nicola Sturgeon, had a meeting recently with Labour's Cathy Jamieson, who urged her to adopt three measures to assist in the current credit crunch. These were pre-repossession protocols similar to those announced south of the border, tighter regulation of sale and lease-back schemes, and shared equity as an alternative to outright repossessions.

But an aide to Ms Sturgeon told The Herald that the first of these measures added virtually nothing to existing arrangements, the second was entirely a matter for the Westminster government, and on the third Holyrood was already well-advanced in creating a shared equity scheme.