Latest figures from UK Finance have revealed that the number of customers on a payment deferral has significantly decreased in recent months.
Of the 4.4 million payment deferrals granted across mortgages, credit cards and personal loans since the start of the pandemic, 323,700 are currently still in place. The support provided by lenders builds on more than six months of help for customers.
Lenders have now provided a total of 2.5 million mortgage payment deferrals since the start of the pandemic. As of 9th October 2020, there were an estimated 162,000 mortgage customers still on a payment deferral, down from a peak of 1.8 million in June. The industry has also provided over 1.13 million payment deferrals on credit cards, of which 97,300 are still in place. Another 793,000 payment deferrals have been provided for personal loans, of which 64,400 are still in force. In addition, over 27 million personal current accounts have had an interest-free buffer applied to their arranged overdraft.
However, as the furlough scheme and existing support measures come to an end on 31st October 2020, the banking and finance industry has reiterated its commitment to support mortgage, personal loan and credit card customers facing financial difficulty.
UK Finance says that In line with the latest guidance for consumers from the Financial Conduct Authority (FCA), lenders will continue to offer a range of options to support borrowers who face financial difficulty. The FCA’s latest customer research also shows that almost a third of adults (31 per cent) have seen a decrease in income, with households seeing income fall by a quarter, on average.
To ensure these households are supported, all lenders will offer tailored options to support customers through payment difficulties resulting from Covid-19, taking into account their personal circumstances including any local restrictions that may be imposed. Support will be available both for those who have previously taken a payment deferral and those who are newly in financial difficulty.
Ongoing support for mortgage customers may include:
- Extending the length of the mortgage term.
- Changing the type of mortgage (e.g. a temporary change to an interest-only mortgage).
- Deferring payment of the interest or the sums due
- Capitalising the interest accrued, i.e. adding the added interest owed to the balance of the loan.
Ongoing support for credit card and personal loan customers may include:
- Accepting reduced payments for a further short period if the customer’s circumstances are expected to improve.
- Accepting reduced payments via a longer-term repayment plan if the customer is experiencing more severe financial difficulties.
- onsidering whether the refinancing of the outstanding credit at a sustainably affordable payment rate is an option which will be in the customer’s interests.
Eric Leenders, Managing Director of Personal Finance, UK Finance, said “The banking and finance industry is providing unprecedented levels of support to help customers through the Covid-19 crisis. We understand that many people’s finances will continue to be impacted by this pandemic and want to reassure them that ongoing help is available, tailored to their individual circumstances.”
“It will always be in the best interest of customers to resume making payments on their mortgage, loan or credit card if they’re able to do so.”