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Latest figures from UK Finance show 1.86 million
mortgage payment holidays have been issued as of 28 May 2020 –
equivalent to one in six mortgages.
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Lenders are committed to helping those customers that
need assistance at this time, including through the
extension of mortgage payment holidays if appropriate.
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Lenders also commit to continue the moratorium on
involuntary repossession for residential and buy-to-let
customers to 31 October 2020, helping provide borrowers with
reassurance that they will not have their homes repossessed at
this difficult time.
Responding to the Financial Conduct
Authority’s updated
guidance for mortgage customers affected by coronavirus,
Stephen Jones, UK Finance CEO, said:
“Mortgage lenders are committed to supporting their
mortgage customers through these difficult times and the final
guidance from the regulator will enable both firms and borrowers
to plan ahead. For those customers who are nearing the end of
their three-month payment holiday, providers are offering them
help and flexibility to choose the next steps which best suit
their needs. It will always be in the borrower’s best interests
to pay their mortgage if they are able as this will reduce the
level of their repayments in the long run but for those customers
who are struggling, help is available.
“The extension of the payment holiday scheme until 31
October 2020 for customers yet to take to one will provide
much-needed breathing space for those who need it, while the
continued moratorium on involuntary repossession will ensure no
homeowner loses their home because of the impact of Covid-19 on
their finances.
“A payment holiday may not be the right choice for
everyone, and borrowers should only apply if they need one. Any
borrower who is concerned about their financial situation should
check with their lender as early as possible, with providers’
website giving the latest information on the support
available.”
Ends
Notes to Editor
1. UK Finance is the collective voice for the banking and
finance industry. Representing more than 250 firms across the
industry, we act to enhance competitiveness, support customers
and facilitate innovation.
2. Figures relate to the total first charge
mortgage market, grossed up from a representative sample up to 28
May 2020. The figures include both residential and buy-to-let
mortgages, and may be subject to modest revision as firms
identify double-counting and other anomalies in previous daily
totals.
3. There are currently 10,970,000 outstanding
first charge mortgages in place in the UK, meaning the mortgage
payment holidays in place account for 17 per cent of total
mortgages or slightly over one in six.
4. PRA
statement provides further information on the
application of regulatory capital and IFRS 9 requirements to
payment holidays granted or extended to address the challenges of
Covid-19.
5. The value of the average interest payment
deferred each month (£260) and the average value of suspended
payments per month (£755) is calculated using the average
interest rate (2.37 per cent) on an average loan size (£132,128)
in the UK. These figures are correct as of 31 December 2019.
6. More information on the measures introduced
to support mortgage customers impacted by Covid-19 is
available here.
These measures include:
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A three-month moratorium on residential and buy-to-let
possession action, giving customers reassurance that they will
not have their homes repossessed at this difficult time.
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Offering payment holidays to all buy-to-let landlords
whose tenants have lost income because of the impact of
Covid-19, with landlords expected to pass on this relief to
their tenants to ensure that they are supported during this
time.
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Offering customers who have exchanged contracts for a
house purchase the option to extend their mortgage offer for up
to three months to enable them to move at a later date.
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For residential and buy-to-let customers that have
already taken a payment holiday on their mortgage, it may be
appropriate in some circumstances for this to be extended. 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 the customer
has not already done so or a further extension of the
payment holiday, depending on the borrower’s circumstances.
Where possible, borrowers will be able to explore their options
online.
7. Possessions can still go ahead if the property is empty
or the customers has requested the possession to continue.
8. In line with FCA guidance, customers will
continue to be charged interest during the payment holiday unless
their lender has told them otherwise.
