The mortgage deferrals scheme was introduced by the Financial Conduct Authority in April last year. The scheme allows homeowners to delay repayments for up to six months. Therefore, UK Finance recommends applying for a mortgage payment deferral well before the end of February. The company provides customers with a full six-month deferral period. Despite this, the mortgage industry is bracing itself for the impact of the wave of arrears and repossessions.
According to UK Finance figures, there were around 130000 mortgage payment deferrals issued by UK lenders at the end of December. That’s one in 84 mortgages. In June, one in six customers got a deferment. In November, 1.8 million had a payment deferral. The data show that the mortgage industry is bracing for a new wave of repossessions and arrears as a result of the current economic situation.
Mortgage Holidays: UK Lenders Issued 130000 Mortgage Deferrals at End of December
The FCA has confirmed that no home will be repossessed without the consent of the homeowner. Those who want a mortgage deferral must apply before the end of February to qualify for the full six-month period. In addition to the extension of the payment deferral, the FCA has also backed the extension of the moratorium on possessions until 1 April 2021. These actions will help reassure borrowers and provide a sense of security.
L&C Mortgages encourages mortgage holders to apply for a mortgage payment deferral before the end of February. This is because the FCA has confirmed that no home will be repossessed without a signed agreement. Further, the FCA has recommended the extension of the moratorium on possessions until 1 April 2021. It is important to note that many people who missed their payments have a significant impact on their credit file.
The end of the Covid holiday had a negative impact on the mortgage holidays market. The government was unable to sell any property until March 2019. The UK Government provided PS94.6 million to the NHS for the prevention of home repossessions. The FCA also recommended that banks make a decision on the deferral policy. But the decision was made on 20 March. It has been a while since then, but the FCA has finally released the guidance.
In the end of the year, the government has promised to give more help to those affected by the pandemic. The pandemic is expected to have a negative impact on a household’s finances. The number of households affected by the Covid holiday is one in eight. The remaining ninety-nine percent of homeowners have already returned to their mortgages, despite the lack of a few mortgage deferrals in recent years.
The end of the year was the last year that UK lenders issued mortgage deferrals to those affected by the recession. The government’s action had a significant impact on the UK economy. It caused a massive slump in the value of property. Lenders, however, had to step in to help borrowers. They are still keen to get mortgage payment relief and have made the rules more flexible.
A new survey by the Bank of England revealed that UK lenders had improved their forbearance policies and granted more flexibility to borrowers. These measures should include interest-only mortgages or interest-free credit card balance transfers. The survey was conducted between November 23 and December 11, 2020. The bank of Britain expects to cut interest rates to zero by the end of the year. This will have a significant impact on the economy in the UK.