1 in 9 freeze mortgage payments with impact of Covid-19

One in nine mortgages in the UK are now subject to a mortgage payment holiday, data from UK Finance revealed today.

For the average mortgage holder, the payment holiday amounts to £260 per month of suspended interest payments.

Lenders have provided over 1.2 million mortgage payment holidays to households whose finances have been impacted by Covid-19

As people across the country are struggling to cope financially, mortgage holidays were announced by Chancellor Rishi Sunak on 17 March and, since then, lenders have been inundated by requests to freeze payments.

The number of mortgage payment holidays in place more than tripled in the two weeks between 25 March and 8 April, growing from 392,130 to 1,240,680 – that’s around 61,000 being granted each day.

Commenting, Stephen Jones, UK Finance CEO, said:

“We understand that the current crisis is having a significant impact on household finances for people across the country. Lenders have a number of options available to help, and payment holidays aren’t always the right solution for everyone. We would therefore encourage any mortgage customers concerned about their financial situation to check with their lender so they can find out more information on the support available and how to apply.

How do I apply for a mortgage holiday in the wake of COVID-19?

1. Lenders are said to be allowing homeowners who are up-to-date with mortgage payments to apply for mortgage holidays.
2. Speak to your mortgage lender, sooner rather than later if you think you may struggle. We are hearing from homeowners that they are having to spend long periods of time on the telephone trying to get through to their lender to get some information. But persevere. Please leave your experiences in the comments box below.
3. Telephone lines remain extremely busy so customers who are concerned about making their mortgage payments are advised to look at their lender’s website in the first instance, which will include the latest information on the support available and should be able to answer many queries. Many lenders are offering customers the option to apply for a mortgage payment holiday through an online form on their website.
4. DO NOT simply cancel your direct debits before a payment holiday has been agreed, as this will be counted as a missed payment and could impact your credit file.

What else do I need to consider before getting a mortgage holiday?

It’s worth noting:

• A payment holiday may not be the right choice for everyone, and customers should only apply if they need one. Those requiring a mortgage payment holiday will need to self-certify that their income has been either directly or indirectly impacted by the coronavirus.
• A mortgage holiday doesn’t mean your lender will cover the cost of your mortgage or simply wipe away three months worth of mortgage payments. They are not paying your mortgage for you. Instead, they will be allowing you to defer the payments to a later date in the future.  How these deferred mortgage payments are worked out varies by lender. For more on this see our guide to Mortgage Holidays.
• Don’t forget that you could save a lot of money off your monthly repayments by simply remortgaging. The UK base rate very recently reduced from 0.75% to 0.25% – the lowest rate for hundreds of years.
• That means if you’re on a tracker mortgage or variable rate mortgage you could see a reduction in your monthly payment as the rate cut feeds through. Fixed rates are already available at extremely low rates and could offer the chance to lock in whilst interest rates are so low.

See if you can get a cheaper deal on your existing mortgage now, online or over the phone with fee-free mortgage experts at L&C

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Angela Kerr Director, Editor

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