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Lenders commit to ongoing support for mortgage borrowers impacted by Covid-19

  • Published date: 02.06.2020
  • Latest figures from UK Finance show 1.86 million mortgage payment holidays have been issued as of 28 May 2020 – equivalent to one in six mortgages.
  • Lenders are committed to helping those customers that need assistance at this time, including through the extension of mortgage payment holidays if appropriate.
  • Lenders also commit to continue the moratorium on involuntary repossession for residential and buy-to-let customers to 31 October 2020, helping provide borrowers with reassurance that they will not have their homes repossessed at this difficult time.

Responding to the Financial Conduct Authority’s updated guidance for mortgage customers affected by coronavirus, Stephen Jones, UK Finance CEO, said:

Mortgage lenders are committed to supporting their mortgage customers through these difficult times and the final guidance from the regulator will enable both firms and borrowers to plan ahead. For those customers who are nearing the end of their three-month payment holiday, providers are offering them help and flexibility to choose the next steps which best suit their needs. It will always be in the borrower’s best interests to pay their mortgage if they are able as this will reduce the level of their repayments in the long run but for those customers who are struggling, help is available.

"The extension of the payment holiday scheme until 31 October 2020 for customers yet to take to one will provide much-needed breathing space for those who need it, while the continued moratorium on involuntary repossession will ensure no homeowner loses their home because of the impact of Covid-19 on their finances.

"A payment holiday may not be the right choice for everyone, and borrowers should only apply if they need one. Any borrower who is concerned about their financial situation should check with their lender as early as possible, with providers’ website giving the latest information on the support available.

Ends

For more information please call the UK Finance press office on 020 7416 6750 or email press@ukfinance.org.uk

Notes to editor

1. UK Finance is the collective voice for the banking and finance industry. Representing more than 250 firms across the industry, we act to enhance competitiveness, support customers and facilitate innovation.

2. Figures relate to the total first charge mortgage market, grossed up from a representative sample up to 28 May 2020. The figures include both residential and buy-to-let mortgages, and may be subject to modest revision as firms identify double-counting and other anomalies in previous daily totals.

3. There are currently 10,970,000 outstanding first charge mortgages in place in the UK, meaning the mortgage payment holidays in place account for 17 per cent of total mortgages or slightly over one in six.

4. PRA statement provides further information on the application of regulatory capital and IFRS 9 requirements to payment holidays granted or extended to address the challenges of Covid-19.

5. The value of the average interest payment deferred each month (£260) and the average value of suspended payments per month (£755) is calculated using the average interest rate (2.37 per cent) on an average loan size (£132,128) in the UK. These figures are correct as of 31 December 2019.

6. More information on the measures introduced to support mortgage customers impacted by Covid-19 is available here. These measures include:

  • A three-month moratorium on residential and buy-to-let possession action, giving customers reassurance that they will not have their homes repossessed at this difficult time.
  • Offering payment holidays to all buy-to-let landlords whose tenants have lost income because of the impact of Covid-19, with landlords expected to pass on this relief to their tenants to ensure that they are supported during this time.
  • Offering customers who have exchanged contracts for a house purchase the option to extend their mortgage offer for up to three months to enable them to move at a later date.
  • For residential and buy-to-let customers that have already taken a payment holiday on their mortgage, it may be appropriate in some circumstances for this to be extended. The range of support available to customers unable to meet their normal repayments include reduced payments, a move to interest only payments for a period, extending the term of the mortgage to reduce payments, taking a payment holiday if the customer has not already done so  or a further extension of the payment holiday, depending on the borrower’s circumstances. Where possible, borrowers will be able to explore their options online.

7. Possessions can still go ahead if the property is empty or the customers has requested the possession to continue.

8. In line with FCA guidance, customers will continue to be charged interest during the payment holiday unless their lender has told them otherwise.

  • Published date: 02.06.2020