Help remains available for anyone worried about paying their mortgage

Today's Arrears and Possessions Update for Q1 2021 shows much the same picture as in Q4 2020, as lenders continue to support customers through the mortgage payment deferral scheme or tailored forbearance support.

The number of customers in early arrears (those less than five per cent of balance in arrears) decreased in Q1 2021 and remains lower than before the Covid-19 pandemic began. As with last quarter, this is because mortgage payment deferrals have supported customers who were not in financial difficulty at the beginning of the pandemic to remain out of arrears. While the scheme has now closed for new applications, those who are currently in receipt of a payment deferral remain eligible for the full six months before all deferrals end on 31 July 2021.

For those who have come to the end of their deferral and are still struggling, lenders are providing them with tailored support. This means that we do not expect a great spike in arrears once the Covid-19 temporary supports have ended. Instead, as the economic impact of the pandemic begins to unfold we anticipate that the number of early arrears will increase gradually.  

What does this support mean in practice?  

We urge any customer who is worried about their finances to get in touch with their lender as early as possible to get the help they need. Lenders will ask them questions about their financial situation to find the best option that is tailored to their circumstances. Typically, a customer will agree with their lender to pay less than their full mortgage payment for a period of time, based on how much they can afford. They will still owe the money, but the lender will work with them to find an affordable way to repay it once their financial circumstances improve. 

The number of people in more significant arrears has increased. What does this mean for possessions?

The number of customers in higher arrears bands has gradually increased over the course of the past year. Where customers are receiving tailored support, they will agree with their lender to pay less than their full mortgage payment and the remaining unpaid amount is counted as arrears. This unpaid amount will increase slowly over time.

The number of customers with over ten per cent of balance in arrears will also include the backlog of possession cases that did not occur in 2020; these cases will have been in train before the pandemic began.

If a mortgage is no longer sustainable and all tailored support options have been exhausted, a lender may be required to start possession proceedings. A Possession Order is only granted by a judge after a thorough court-based process which will consider the borrower's individual circumstances. Read our blog here on possessions and why and when a lender may need to take this option.

It is important to remember that help will always be available from lenders for anyone who is worried about paying their mortgage. Just get in touch with your lender.


Free event: Financial Difficulty through the Pandemic - part of the Customer Experience Summit, 7-11 June

The scale of measures introduced in 2020 to assist those facing a sudden change to their circumstances was unprecedented. More than a year after the first UK lockdown, how much have the measures helped? Which customer segments are recovering well and who will need much more support over the coming year and beyond? How have consumer expectations shifted and how will that affect what they expect of their providers in the future? A panel of senior policy makers will discuss these questions and more as we examine the fallout of the pandemic and the resilience of the sector

The Customer Experience Summit is a new UK Finance event where we will discuss the path to economic recovery and the opportunities to do so in ways that benefit customers and meet their changing needs.

Tickets are completely free and include access to all sessions, including: 

  • Financial Difficulty Through the Pandemic
  • Access to Financial Services
  • Protecting Vulnerable Customers
  • Improving the Home-Buying Experience for Customers
  • Covid and the Changing Psychology of the Customer Experience
  • Human-Centred Product Design
  • Data-Driven Decision Making
  • Becoming Your Customer's Preferred Provider
  • Building a Culture Where the Right Behaviours Thrive at Every Level
  • Payments: Improving Consumer Protections
  • Open Banking and Open Finance
  • Keynote Panel: Strategic Priorities

You can learn more about each session and register for your complimentary ticket on the UK Finance website, here.

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