By 
Homeowners who have been hardest hit by the coronavirus crisis now must broker a deal with their banks as hundreds of thousands of mortgage holidays end.
About 2.5 million people have asked their lender for a payment break since March. Many have lost their job or seen their household income fall as a result of the pandemic.
As the country entered a new lockdown, banks renewed their pledge to offer payment breaks, known as mortgage holidays, to customers struggling to repay. However, the rules allow borrowers to claim only two three-month payment breaks. After this, customers must negotiate a further support package with their bank.
Telegraph Money analysis shows that as many as 90,000 homeowners have missed payments after their mortgage holiday expired. A further 300,000 households could face a shock in the coming weeks as their payment breaks end.
On Thursday, 30 MPs wrote to the City watchdog calling for it to rethink the six-month limit.
Adam Butler, of StepChange, a debt charity, said he feared struggling households would face a “lender lottery” when they sought help. “Payment holidays provided an accessible and clearly understood option for those in difficulty; we are concerned this will now be replaced with a lender lottery,” he said.
“Those who are struggling may feel under pressure to resume payments or accept unaffordable forbearance offers, particularly if they have concerns about negative credit reporting.”
I’m concerned about my mortgage, where can I get help?
There are several options available to homeowners at the end of their mortgage holiday, such as extending the mortgage term so that monthly payments are lower or switching to an interest-only loan. Alternatively, the borrower could resume repayments at a lower level than previously.
The Financial Conduct Authority, said lenders had been told they had to offer sustainable and tailored support to customers and said it would consider feedback calling for the six-month limit to be extended.
UK Finance, the banking trade body, was unable to provide industry data on what had happened to customers after their second mortgage break.
However, figures published by Lloyds Banking Group, which includes Lloyds, Halifax and Bank of Scotland, showed that tens of thousands of people were unable to resume their mortgage payments as before. Lloyds has granted half a million mortgage holidays since the Covid crisis began, a fifth of the total. Of these, 14,000 borrowers are still on their first payment break, 61,000 have extended it and 18,000 holidays have ended and customers have missed payments.
On the basis of these figures, it can be estimated that, across all lenders, around 300,000 customers are currently on an extended mortgage break and some 90,000 have missed payments after their holidays ended.
Coronavirus property market timeline
Mr Butler said he feared that many people were borrowing from other sources to fund repayments. He urged those with debt problems to seek further advice. “There is a question about whether many in this group are turning to unsustainable methods of borrowing to keep up,” he said.
Banks have agreed not to leave negative marks on the credit files of customers who take a mortgage holiday. However, lenders can see who has taken breaks by examining bank statements and other sources. These people could find it harder to borrow in future.
Rachel Neale of UK Mortgage Prisoners, a campaign group, said she feared this could create a new generation of homeowners who could not switch their loan to another bank even if it would cut their repayments. Thousands of homeowners have been trapped on higher rates since the last recession of 2008-09.
UK Finance said mortgage lenders had guaranteed that customers could transfer to other loans at their current bank and that additional support was available to customers at the end of a payment holiday. Any temporary arrangements are regularly reviewed to ensure they are appropriate. No repossessions will take place until Jan 31 2021.
Comments