Money saving specialist gives ‘terrifying’ update about mortgages for UK homeowners
UK house prices are forecast to slump by 13 percent this year, a fall of up to £38,000 off the price of an average UK home according to the Centre for Economics and Business Research (CEBR). The crash will be driven by the coronavirus pandemic, as the outbreak halts the market and causes a drop in the amount people can afford to pay due to wage cuts and unemployment. One expert has pointed out the pandemic has already started to badly affect homeowners, with as many as one in nine now on a mortgage holiday.
Recent data released by trade association UK Finance has revealed more than 1.2million mortgage payment holidays have been issued, indicating the coronavirus is having a wide effect on people’s finances.
This accounts for more than 11 percent, or one in nine, of all UK mortgages.
Katie Morley, Consumer Champion at the Daily Telegraph, described the data as “terrifying”.
She wrote on Twitter: “Terrifying data: 1 in 9 mortgages now on a payment holiday (UK Finance).
“Major sign of how widespread financial distress is currently among UK homeowners.”
For the average mortgage holder, the payment holiday amounts to £260 per month of suspended interest payments.
Last month the Government announced homeowners and landlords can apply for a three-month mortgage payment holiday to help ease financial stresses during the pandemic.
The move allows homeowners, who are up-to-date on their montage repayments, to request a mortgage payment holiday of up to three months.
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People taking this option will still owe the money and interest will still accrue, meaning it may take longer and cost more to clear the mortgage at the end.
Those applying for a payment holiday have to self-certify that their income has been either directly or indirectly impacted by coronavirus.
UK Finance said the number of mortgage payment holidays in place more than tripled in the two weeks between March 25 and April 8, surging from 392,130 to 1,240,680.
This is an increase of nearly 850,000, amounting to an average of around 61,000 payment holidays being granted by lenders per day.
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Stephen Jones, UK Finance chief executive, said: “Mortgage lenders have been working tirelessly to help homeowners get through this challenging period.
“The industry has pulled out all the stops in recent weeks to give an unprecedented number of customers a payment holiday, and we stand ready to help more over the coming months.
“We understand that the current crisis is having a significant impact on household finances for people across the country.
“Lenders have a number of options available to help, and payment holidays aren’t always the right solution for everyone.
“We would, therefore, encourage any mortgage customers concerned about their financial situation to check with their lender so they can find out more information on the support available and how to apply.”
It comes after the CEBR forecast the average UK house prices will fall by 13 percent this year.
The report published by CEBR predicted the collapse in prices would take up to £38,000 off the price of an average UK home.
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