UK Finance has reported that mortgage lenders have given over 1.6 million payment holidays as of Friday 24 April 2020.
One in seven mortgages are now covered by payment holidays following steps taken by lenders to help households whose finances have been affected by the Covid-19 crisis.
For the average mortgage holder, the payment holiday amounts to £755 per month of suspended payments.
Lenders continue to offer product transfers enabling existing customers who come to the end of a fixed term product, and meet eligibility criteria, to move to a new deal. Further to the industry agreement announced in July 2018, the industry today also announces additional help for homeowners on payment holidays or for those who have been furloughed. Normally customers on payment holidays would not qualify for a product transfer, but given the current exceptional circumstances lenders are waiving this rule to help borrowers impacted by Covid-19.
Product transfers are for like-for-like mortgages and tend not to require a new affordability assessment, meaning existing borrowers who have been furloughed will also be eligible.
More than 1.2 million mortgage payment holidays were approved in the first three weeks of the scheme, and hundreds of thousands more customers have been granted payment holidays in the last fortnight by lenders helping mortgage holders affected by the coronavirus.
Over one third of all payment holidays approved so far were done so between 25 March and 1 April, as lenders worked with customers quickly after the scheme was announced to ensure homeowners impacted by Covid-19 received the support they need.
Stephen Jones, UK Finance CEO, said: “Lenders understand that many households are seeing their finances squeezed due to the coronavirus pandemic and we are working hard to help customers get through these tough times.
“The industry has acted quickly to support homeowners through this crisis and has taken decisive steps to ensure that eligible customers on payment holidays due to Covid-19 can opt for the security of fixing their monthly mortgage payments going forward.
“There is a range of support available to mortgage holders concerned about their finances. We would encourage any homeowners impacted by coronavirus to visit their lender’s website in the first instance to find out more information and how to apply.”
Robert Sinclair, chief executive of AMI, said: “Whilst this support for consumers is positive and avoids the consumer falling onto a lender’s SVR, it is inward-looking as it makes no consideration as to whether the deals offered are appropriate.
“Some customers may find that if they revoke their mortgage payment holiday and re-mortgage, it could result in a more suitable outcome. They also may not be aware of how a specific deal compares to others in the marketplace.
“As a result of Covid-19 many more consumers may be vulnerable, so it is vitally important that they explore their options. Whilst a PT may seem the most straightforward option, consumers should talk to a mortgage broker as they are well placed to assess individual circumstances.”