Lenders continue to provide financial support for customers impacted by Covid-19

  • 127,000 mortgage payment deferrals in place in mid-November, a significant reduction in customers seeking this form of support from June's peak of 1.8 million 

  • 55,000 credit card and 22,000 personal loan payment deferrals in place for customers facing financial difficulty, reduced from 84,000 payment deferrals on credit cards and 50,000 on personal loans at the end of October. 

  • The banking and finance industry remains committed to supporting mortgage and consumer credit customers through new or extended payment deferrals and tailored support 

The number of payment deferrals across mortgages and consumer credit reduced in recent weeks as more customers returned to making repayments or sought alternative forms of tailored support from their lender, according to the latest figures published by UK Finance. With continued economic uncertainty ahead, lenders are committed to providing help to those whose finances have been affected as a result of the pandemic, through payment deferrals and tailored support, as appropriate to the customers? needs. 

As of 20 November 2020, an estimated 127,000 payment deferrals for mortgage holders were in place, a significant reduction in customers seeking this form of support from the peak of 1.8 million in June 2020. UK Finance figures show that the estimated number of deferrals in place has been below 200,000 since early October, with industry analysis suggesting that 89 per cent of those customers whose mortgage payment deferrals have ended have now returned to making repayments.  

Mortgage lenders will continue to provide support to homeowners facing financial difficulties, in line with the FCA's extension of the mortgage payment deferral scheme until 31 July 2021. The extension to the scheme means that customers have until 31 March to apply for, or extend, a payment deferral, up to a maximum deferral period of six months. Mortgage holders who have not yet sought support through the scheme are encouraged to apply well before their February 2021 mortgage payment is due. This will ensure they benefit from the full six month deferral period. Customers who have already benefited from a full six month payment deferral should contact their lender to discuss tailored support if they are continuing to experience financial difficulty. 

UK Finance statistics also show that the number of customers with consumer credit deferrals in place has also significantly reduced. As of 26 November, 55,000 credit card payment deferrals remain in place out of the 1.18 million granted since the launch of the scheme in March 2020. Similarly, 22,000 personal loan payment deferrals are in operation out of the 828,000 granted over the course of the pandemic.  

The banking and finance industry remains committed to offering support to consumer credit customers, with the application deadline for applying for or extending payment deferrals having been extended until 31 March 2021. Customers still on a deferral at the end of March can apply to extend for up to a further three months if they have not taken the full six month deferral. The FCA has stated that all deferrals will end by 31 July 2021. Tailored support is also available to consumer credit customers who have already had six months of payment deferrals. 

Eric Leenders, Managing Director of Personal Finance at UK Finance, said: 

?The banking and finance industry remains committed to helping customers get through these challenging times. 

?Millions of people struggling with Covid-related income shocks have been supported through payment deferrals, and lenders will ensure customers continue to receive the help they need. 

?It will always be in the long-term interest of borrowers who are able to do so to resume making payments, but for anyone who is still struggling ongoing tailored support will be available. The industry stands ready to provide assistance to those in need.? 

Notes to editor

<ol><li>For more information please call the UK Finance Press Office on 020 7416 6750 or e-mail <a href="mailto:press@ukfinance.org.uk">press@ukfinance.org.uk</a&gt;. </li>
<li>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.  </li>
<li>The payment deferral figures are contained in the latest <a href="https://eur01.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.u…; target="_blank">Household Finance Review Q3</a>. </li>
<li>The banking and finance industry has put in place a clear plan to help Britain through:</li>
</ol><ul><li>2.7 million mortgage payment deferrals. </li>
<li>27 million interest-free overdrafts offered, 1.18 million payment deferrals on credit cards and over 828,000  payment deferrals on personal loans. </li>
<li>£65.5 billion of lending to over 1.5 million businesses through government Covid-19 lending schemes. </li>
<li>Protecting customers from <a href="https://eur01.safelinks.protection.outlook.com/?url=https%3A%2F%2F74n5c… and fraud</a>.</li>
<li>Higher limit for<a href="https://eur01.safelinks.protection.outlook.com/?url=https%3A%2F%2F74n5c…; contactless payments</a>.  </li>
</ul><p>5. All lenders will offer tailored options to support customers through payment difficulties resulting from Covid-19, taking into account their personal circumstances including any local restrictions that may be imposed. Support will be available both for those who have previously taken a payment deferral and those who are newly in financial difficulty. </p>
<p>Ongoing support for mortgage customers may include: </p>
<ul><li>Extending the length of the mortgage term. </li>
<li>Changing the type of mortgage (e.g. a temporary change to an interest-only mortgage). </li>
<li>Deferring payment of the interest or the sums due. </li>
<li>Capitalising the interest accrued, i.e. adding the added interest owed to the balance of the loan. </li>
</ul><p>Updated Mortgage Payment Deferral timeline: </p>
<ul><li>31 January 2021: Firms should not enforce repossession and should not seek, or enforce, a warrant for possession before 31 January 2021, unless there are exceptional circumstances such as a customer requesting that proceedings continue. </li>
<li>February 2021: Customers who are newly impacted and wish to benefit from a full six-month deferral must apply before their February mortgage payment. </li>
<li>31 March 2021: Deadline for all mortgage payment deferral applications. </li>
<li>31 July 2021: The mortgage payment deferral scheme ends. </li>
<li>Our Mortgage Payment Deferral flow chart for consumers can be found <a href="https://eur01.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.u…; target="_blank">here</a>. </li>
</ul><p>6. For those customers who have already taken a total of six months of payment deferrals and continue to need support, all lenders will offer tailored options, taking into account their personal circumstances including any local restrictions that may be imposed. Support will be available both for those who have previously taken a payment deferral and those who are newly in financial difficulty. </p>
<p>Ongoing support for credit card and personal loan customers may include: </p>
<ul><li>Accepting reduced payments for a further short period if the customer?s circumstances are expected to improve. </li>
<li>Accepting reduced payments via a longer-term repayment plan if the customer is experiencing more severe financial difficulties. </li>
<li>Considering whether the refinancing of the outstanding credit at a sustainably affordable payment rate is an option which will be in the customer?s interests. </li>