COVID-19 Mortgage Payment Holidays Fall

Len Burgess[1]

Len Burgess

Money Savings Advice UK house prices hit six-year high in 2020

The number of mortgage payment deferrals in the UK fell in November as more people went back to making regular payments. New data from UK Finance shows that by mid-November, around 127,000 payment deferral plans were in place, down from just under 200,000 in October.

Since March, homeowners who have suffered financial hardship or loss of income due to the Coronavirus pandemic have been able to apply for up to a six-month payment holiday on their mortgage.

More than 1.8 million customers were registered for payment deferrals on their mortgages at its peak in June- equivalent to nearly 1 in 6 mortgages in the UK.

However, since October, this number has not risen above 200,000 as more and more people resume payments or find other forms of support as their payment holidays expire.
Yet despite the shrinking number of active deferrals, the banking industry says it is still poised to help those that need it.

Millions of people struggling with COVID-related income shocks have been supported through payment deferrals, and lenders will ensure customers continue to receive the help they need.

said UK Finance's Managing Director of Personal Finance, Eric Leenders

On 20th November, the UK's Financial Conduct Authority announced that it would extend the mortgage deferral scheme from January 2021 until 31st July 2021 to help those who are still struggling. This means that mortgage holders who are experiencing financial difficulties as a result of COVID-19 have until 31st March 2021 to apply for a payment break on their contract of up to six months.

Under the latest rules, repossessions will be banned until January 2021- unless requested by the homeowner. According to the Bank of England, mortgage payment holidays may have helped to buoy the economy through the Coronavirus crisis by preventing struggling households from having to make large cuts from their budgets and carry on spending.

Struggling mortgage-holders who have registered for a holiday are more likely to have high mortgage debt levels and have had trouble making payments in the past, the Bank found.

Since the start of the scheme in March, more than 2.7 million mortgage-holders have applied, with the vast majority now having returned to making payments.

"It will always be in the long-term interest of borrowers who can do so to resume making payments, "It will always be in the long-term interest of borrowers who can do so to resume making payments, "But for anyone who is still struggling, ongoing tailored support will be available. The industry stands ready to assist those in need."

said Mr. Leenders.

Money Savings Advice Author Len Burgess

Len Burgess

Len Burgess is a professional financial writer who over the last five years has written hundreds of articles for all financial sectors. Len founded Money Savings Advice with the aim of helping consumers navigate their way around the financial world by providing easy to understand financial information and matching consumers with the best financial advisor based on their personal information.

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