More than 1.2 million mortgage payment holidays have been granted to households whose finances have been impacted by Covid-19, UK Finance has revealed.
This means that one in nine residential and buy-to-let mortgages (11.2%) in the UK are now subject to a payment holiday.
For the average borrower, the payment holiday amounts to £260 per month of suspended interest payments. This is calculated using the average interest rate of 2.37% on an average loan size of £132,128 in the UK, as of 31 December 2019.
On 17 March, the Government gave the go ahead for mortgage lenders to allow payment holidays and the number has more than tripled in the two weeks between 25 March and 8 April, growing from 392,130 to 1,240,680.
This is an increase of nearly 850,000 or an average of around 61,000 payment holidays being granted by lenders each day.
According to the Building Societies Association, a quarter of a million of the total figure of 1.24 million is mortgage payment holidays granted by building societies.
The UK Finance figures are grossed up from a representative sample and could be revised slightly as firms identify double-counting and other anomalies in previous daily totals.
Stephen Jones, UK Finance CEO, said: “Mortgage lenders have been working tirelessly to help homeowners get through this challenging period. The industry has pulled out all the stops in recent weeks to give an unprecedented number of customers a payment holiday, and we stand ready to help more over the coming months.”
Robin Fieth, Building Societies Association CEO, said: “We know that this is a difficult time for many homeowners with a mortgage and building society staff have been working hard to offer individuals the right solution.
“For almost quarter of a million so far, that has been a three month payment holiday offering a much needed breathing space to families whose household income is under severe pressure during the current crisis.”
Telephone lines remain extremely busy and lenders have been updating their websites with the latest information on the support available to answer customers’ queries. Many lenders are offering customers the option to apply for a mortgage payment holiday through an online form on their website.
Lenders are also urging mortgage holders not to cancel their direct debits before a payment holiday has been agreed, as this will be counted as a missed payment and could impact their credit file.
By Joanne Atkin
Source: Mortgage Finance Gazette