End of mortgage payment holidays could lead to specialist lending ‘surge’

The end of the mortgage payment holidays scheme this weekend could lead to a surge in customers in need of specialist support or more tailored lending over the next year, according to Masthaven Bank.

The FCA’s extended deadline for mortgage payment holidays will pass over the weekend on 31 July.

Since March last year, millions of people across the UK have taken a temporary payment holidays on their mortgage, as the FCA advised lenders to offer payment holidays to people who were struggling to meet monthly payments as a result of the COVID-19 pandemic.

UK Finance figures from last year showed that 1.9 million mortgage payment holidays were granted to struggling homeowners in the first three months of the scheme.

Masthaven chief lending officer, David Kennedy, said the end of the final mortgage payment holidays this weekend mark the end of a key COVID relief project, but highlighted that the impact of the pandemic is “far from over”.

“The various COVID initiatives put in place last year to bolster the economy have potentially shielded borrowers and the housing market from some of the economic repercussions of the virus, but lenders will have to steel themselves for challenges on the road ahead,” Kennedy said.

“As these pandemic measures and support schemes are wound down, it’s vitally important that customers aren’t abandoned. Some borrowers may be embarrassed to ask for help or unsure about where to turn. Lenders need to be proactive about identifying these customers early and reaching out to them to meet these challenges head on and avoid storing up problems further down the line.

“There might well also be a surge in customers in need of specialist support or more tailored lending over the next year. Specialist lenders have coped well with the challenges of the pandemic so far and they have the right people and tools to take a pragmatic and personalised approach to supporting their customers through this next phase. There are certainly big challenges still to come and no one can afford to bury their head in the sand.”

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