Hundreds of crofters will have their interest payments on house loans halved, easing the financial burden on them during the current economic climate.

The option of moving from a fixed interest rate, as high as seven per cent, to a new variable rate of three point five per cent will ease the financial burden on as many as 1,700 crofters.

Environment Minister Roseanna Cunningham said: "Reducing interest rates will make a difference to a great number of people living in the more remote areas and will help fuel the cautious optimism which is beginning to emerge throughout Scotland.

"The current economic situation is difficult for all but geographical remoteness can increase overheads and make things even more of a struggle.

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"This government is doing all in its power to take action to stimulate growth, ease the burden faced by business and ensure our economy is well-positioned for recovery."

The offer of reduced interest rates is extended to all crofters making regular payments under the Crofters Building Grants and Loans Scheme (CBGLS). The small minority of individuals currently in arrears will be able to take advantage of this once their repayments are brought up to date.

The CBGLS was awarded on a part-grant, part-loan basis for building new or improving existing croft houses. It was replaced in January 2005 by the grant-based Croft House Grants Scheme.

Until its closure in December 2004, the CBGLS provided a fixed rate loan of seven per cent to crofters for a period of up to 40 years. Loans approved before May 1982 paid just over three per cent in interest.

Some 2,200 crofters have outstanding grants and loans. Of those, 500 continue to be repaid at over three per cent and 1,700 at seven per cent interest. The last of the approved loans is scheduled for completion in 2045.

(GK/KMcA)