More than 1.2 million mortgage payment holidays have been provided to home owners whose finances have been hit by coronavirus, according to a trade association.
This equates to around one in nine (11.2%) mortgages across the UK now being subject to a payment holiday, UK Finance said.
For the average mortgage holder, the payment holiday amounts to £260 per month of suspended interest payments.
For a mortgage where chunks of the capital (the amount borrowed) and interest are normally being repaid, the average payment holiday equates to around £775 of deferred payments each month.
Lenders announced on March 17 that they would support customers facing financial difficulties due to the Covid-19 crisis.
People who are struggling to make their payments, perhaps because they have had a pay cut or their work has temporarily stopped due to Covid-19, can request a mortgage payment holiday of up to three months.
UK Finance CEO Stephen Jones responds to the statement by the chancellor regarding support for mortgage customers who are experiencing issues with their finances as a result of Covid-19. Full comment here: https://t.co/lro0pIQYO8 pic.twitter.com/4ReEpqeYlh— UK Finance (@UKFtweets) March 17, 2020
Payment holidays are available to customers who are up-to-date on their mortgage payments. People taking up this option will still owe the money and interest will still accrue.
Home owners applying for a mortgage payment holiday will need to self-certify that their income has been either directly or indirectly impacted by coronavirus.
UK Finance has said firms will make every effort to ensure payment holidays do not negatively impact on credit files.
The number of mortgage payment holidays in place more than tripled in the two weeks between March 25 and April 8, growing from 392,130 to 1,240,680. This is an increase of nearly 850,000 or an average of around 61,000 payment holidays being granted by lenders per day.
Stephen Jones, UK Finance chief executive, said: “Mortgage lenders have been working tirelessly to help home owners get through this challenging period. The industry has pulled out all the stops in recent weeks to give an unprecedented number of customers a payment holiday, and we stand ready to help more over the coming months.
“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.”
Robin Fieth, chief executive of the Building Societies Association (BSA), said: “We know that this is a difficult time for many home owners with a mortgage, and building society staff have been working hard to offer individuals the right solution. For almost quarter of a million so far, that has been a three-month payment holiday offering much needed breathing space to families whose household income is under severe pressure during the current crisis.”
UK Finance said 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.
Many lenders are offering customers the option to apply for a mortgage payment holiday through an online form on their website.
Lenders are also urging mortgage holders not to cancel their direct debits before a payment holiday has been agreed, as this will be counted as a missed payment and could impact their credit file.