The final payment holiday issued during the coronavirus crisis for struggling mortgage borrowers has, as you will undoubtedly know, come to an end, but lenders must act swiftly to ensure ‘homeowners do not fall from the safety of the holiday into arrears’.
During the pandemic, borrowers were able to pause their debts by up to six months if their income had taken a hit by the spread of Covid-19.
The deadline for taking out a new payment holiday was 31 March this year, with all breaks to finish by 31 July.
Conor Murphy, CEO of Smartr365 and Capricorn Financial, commented: “It was vital that lenders not only offered mortgage payment holidays to those in need but also did it quickly, given the severity of the financial situations that many found themselves in as a result of the global crisis. However, as this temporary lifeline comes to an end, advisors and lenders must now act with a sense of urgency to ensure homeowners do not fall from the safety of the holiday into arrears.
“This should therefore bring a renewed focus to vulnerable customers; how we spot them, monitor them and help them. A strong CRM system, that allows you to communicate with clients virtually or in-person and keep track of their cases will be key to this. Finding ways to then help those who have been identified as needing additional support is likely to be complex and time-consuming.
“The recent period of economic decline means it’s great to see net mortgage borrowing hit a record high in June, according to the Bank of England’s latest Money and Credit Update, but we must also ensure that this growth is safe and sustainable for borrowers.”
The impact of the pandemic continues to rumble on exacerbating homeownership barriers for many, according to Perenna’s co-founder and COO, Colin Bell.
Bell said: “The impact of the pandemic continues to rumble on exacerbating homeownership barriers for many, with affordability issues remaining a significant hurdle for thousands of aspiring buyers and creating financial pressures and mental health issues for existing borrowers.
“Even for those already on the housing ladder, the last 18 months have been challenging. With the mortgage payment holiday, which was introduced during the crisis for those struggling to meet monthly repayments, finally coming to an end, contingency plans will be needed for borrowers across the country.
“The current structure of the UK mortgage market means that borrowers have significant exposure to rate rises – potentially with hugely detrimental impacts in the event of a financial shock. If we truly want to provide more certainty and peace of mind to existing borrowers, and enable more people to achieve their homeownership ambitions, the way mortgages are financed needs to change.”