Mortgage lenders are here to help if you are worried about your monthly payments. Today's Arrears and Possessions Update for Q4 2020 highlights that arrears have remained close to the historically low levels seen over the past three years. This is unsurprising, as lenders have supported customers while the pandemic continues to impact on people's finances, through the mortgage payment deferral scheme or tailored forbearance support.

The financial support introduced in response to Covid-19 is working. Early arrears (those less than five per cent of balance in arrears) are lower at the end of 2020 than they were before the start of the pandemic. This means that mortgage payment deferrals have supported customers who were not in financial difficulty at the beginning of the pandemic to help them remain out of arrears. And we know that the majority of those that took out payment deferrals have now returned to full payments.

What does this mean for renters?
Buy-to-let (BTL) arrears have increased, so what does this mean for renters? We need to look at the numbers carefully here. The percentage increases look significant, but in fact there were only 440 more BTL landlords in arrears at the end of Q4 2020 than at the end of the previous quarter.

Rising arrears do not mean that landlords or their tenants will lose their homes. Landlords can access the same support as homeowners, so should their tenants be unable to pay the rent, the mortgage payment deferral scheme is available. We have encouraged landlords to pass on this relief to tenants. It is important to contact your lender early if you are concerned about your finances.

Additionally, the moratorium on possessions remains in place until 1 April so mortgage borrowers will not have their home repossessed at this difficult time.

Higher arrears bands
Today's figures also highlight that borrowers in arrears in each band with over five per cent of balance have increased since this time last year from a historically low base. Again, it is important to look at the numbers carefully. In total there are now 8,310 more arrears cases in these higher bands than there were at the end of 2019. This equates to less than a tenth of one per cent of the total population of mortgages in the UK. While each of these customers are facing hardship, this proportion contextualises more fully what these percentage increases mean in real-world terms.

Do these increases mean that customers impacted by Covid-19 are not getting help? Quite the opposite. As the increases are in the higher arrears bands (which take some time to build up), these numbers are most likely driven by customers who had several missed payments before the pandemic. These borrowers may have made use of the full six months of payment deferrals and are most likely receiving or, in need of, the help available through lenders? tailored forbearance support. Unfortunately, some customers in this situation have stopped speaking to their lender. But it is essential that even if you have missed several payments, you contact your lender for help.

Forbearance is where you agree with your lender to pay less than your full mortgage payment for a period of time, based on how much you can afford. Lenders have a range of options available to help you and this will be tailored to your individual circumstances. You will still owe the money, but the lender will work with you to find an affordable way for you repay it once your financial circumstances improve.

Mortgage payment deferrals
Mortgage payment deferrals remain available and we encourage customers to apply for or extend their payment deferral by 31 March 2021 if they continue to struggle with their finances as a result of Covid-19. If you have managed so far and not applied for a payment deferral, but are beginning to worry about your mortgage payments, we encourage you to apply before your February mortgage payment is due if you think you will need the full six months of support. Don't worry if you miss this deadline, you can still apply by 31 March and receive some support. The most important thing is that you apply early before having to miss a payment. Even once payment deferrals end, lenders will still have the full range of tailored forbearance options available to support customers.

The important thing to remember is that to get support, you need to discuss and agree it with your lender. At the risk of sounding like a broken record, if you are worried about paying your mortgage contact your lender early. They stand ready to help.