Covid-19 mortgage payment holiday deferrals are decreasing

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% 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.”

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