One in six mortgages in the UK are now covered by a payment holiday, with more than 1.82 million mortgage borrowers having been granted a payment holiday by lenders.
On average mortgage payments of £755 per month have been deferred with the interest element at £260.
Lenders have welcomed new guidance released which may see some residential and buy to let lenders requiring an extension to their current payment holiday.
The range of support available to customers unable to meet their normal repayments include:
- Reduced payments
- A move to interest only payments for a period
- Extending the term of the mortgage to reduce payments
- Taking a payment holiday if not already done so
- A further extension of the payment holiday, dependent on individual circumstances.
In addition to these measures it has been announced that the pause to repossession’s on currently lived in residential and buy-to-let properties has been extended until 31st October 2020 providing people with reassurance that they will not have their homes repossessed at this difficult time.
Borrowers who are concerned about their ability to make payments should get in touch with their lenders to consider the full set of options available to them.
Stephen Jones, UK Finance CEO, said: Mortgage lenders are committed to providing those borrowers nearing the end of their three-month payment holiday with help and flexibility in choosing the next steps which best suit their needs. The industry looks forward to regulatory guidance being finalised swiftly to ensure both borrowers and lenders can plan over the coming weeks. Meanwhile those borrowers who have already taken a mortgage payment holiday and can afford to make payments are encouraged to do so, as this will reduce the level of their repayments in the long run.
“For those borrowers who have not already applied for a mortgage payment holiday, the industry supports the extension of the availability of payment holidays until 31 October 2020 as this will provide much-needed breathing space for borrowers who need it. Lenders are also committed to the moratorium on involuntary repossession to ensure no homeowner loses the roof over their head because of COVID-19 related repayment difficulties.
A payment holiday may not be the right choice for everyone, and borrowers should only apply if they need one. We would encourage any borrowers concerned about their financial situation to check with their lender, starting by looking at their website which will have the latest information on the support available.”
