Lenders continue commitment to supporting mortgage customers into 2021

New figures published by UK Finance show there were 130,000 mortgage payment deferrals in place at the end of December 2020. It means that one in 84 mortgages in the UK were subject to a payment deferral at the end of last year, compared to one in six in June 2020. The number of mortgage deferrals in place has been broadly stable since late October, after declining from a peak of 1.8 million in June 2020 as customers returned to making payments or sought tailored support from their lender. Industry analysis suggests that eight in ten customers have now returned to making full mortgage repayments.

With economic uncertainty continuing into the New Year and new national lockdown restrictions in place, the banking and finance industry is reiterating that ongoing support is available for those who need it. Mortgage lenders will continue to support both residential and buy-to-let mortgage customers facing financial difficulties due to Covid-19 over the coming months, following the extension of the payment deferral scheme until the end of July 2021. As set out by the Financial Conduct Authority, customers have until 31 March to apply for or extend a mortgage payment deferral. Mortgage holders who have not yet taken a payment deferral and now require support are encouraged to apply well before their February mortgage payment is due if they want to benefit from the full deferral period of up to six months.

Lenders have also announced their support for an extension of the moratorium on possessions until 1 April 2021, to provide reassurance to both residential and buy-to-let borrowers that they will not have their homes repossessed at this difficult time.

Customers looking to apply for or extend a mortgage payment deferral are encouraged to visit their lender's website in the first instance to find out what options are available. Customers who have already benefited from a full six-month payment deferral, but are continuing to experience financial difficulty, should contact their lender to discuss the tailored ongoing support. It is vital that customers contact their lender before missing a payment as this could show up in their credit file and may impact their ability to borrow or re-mortgage in the future.

It will always be in the long-term interest of customers who are able to do so to resume making payments, but for anyone who is still struggling, ongoing support will be available. Lenders continue to show flexibility to borrowers in financial difficulty and possession is always a last resort, however, it’s always better for customers to pay if they can otherwise the debt will continue to increase.

Eric Leenders, Managing Director of Personal Finance at UK Finance, said:

“Millions of people whose finances have been impacted by the pandemic have already received support from their lender through a mortgage payment deferral.

“With new lockdown restrictions in place, the banking and finance industry is continuing to help customers through these challenging times, including by providing tailored support appropriate to their needs.

“It will always be in the long-term interest of borrowers to resume making payments if they are able to do so. However, for anyone who is still struggling ongoing support will be available, and so we would urge customers to contact their lender to discuss their options before missing a payment.”