More than 1.2m UK households have agreed mortgage holidays with their banks, figures have shown, as the coronavirus crisis causes borrowers unprecedented financial stress.
Chancellor Rishi Sunak announced on 17 March that households with mortgages would be entitled to three-month payment holidays, meaning payments would be suspended. It was part of an unprecedented coronavirus response package that has since been added to.
By 8 April, more than 1.2m mortgage holidays had been agreed, banking industry body UK Finance said today. This means more than one in nine mortgages are subject to holidays.
UK Finance said the holiday amounts to £260 per month of suspended interest payments for the average borrower.
The number of mortgage payment holidays in place more than tripled in the two weeks between 25 March and 8 April, growing from 392,000 to 1.24m, according to the figures.
The surge in demand shows the acute financial stress households are under as the economy craters. Unemployment is expected to rocket, with claims for benefits through the universal credit system almost hitting a million at the start of April.
Banks are eager to show they are doing their bit amid the slowdown following criticism of the coronavirus business loans scheme.
Business groups have complained that money is not getting to companies fast enough through the government’s flagship lending scheme, which is far behind other countries in the amount lent.
Suspending mortgage payment problems is simpler than approving and organising new loans, however, and the scheme appears to have got up and running quickly.
UK Finance chief executive Stephen Jones said: “The industry has pulled out all the stops in recent weeks to give an unprecedented number of customers a payment holiday.”
“We understand that the current crisis is having a significant impact on household finances for people across the country,” he said. “Lenders have a number of options available to help.”
Robin Fieth, chief executive of Building Societies Association, said: “We know that this is a difficult time for many homeowners with a mortgage and building society staff have been working hard to offer individuals the right solution.”