One in every nine mortgages in the UK is now subject to a payment holiday of up to three months, according to industry body UK Finance.
The number of mortgage holidays in place more than tripled in the two weeks to April 8, as banks and building societies were inundated with requests and granted around 61,000 of the payment deferrals each day.
Stephen Jones, CEO of UK Finance, 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.”
Why is this happening?
On March 17, Chancellor Rishi Sunak said mortgage lenders had agreed to allow customers whose finances had been impacted by coronavirus to take a payment holiday of up to three months.
It was followed a day later by the announcement that emergency legislation would be introduced to protect renters from being evicted for three months, even if they fell behind with their rent.
Who does it affect?
UK Finance said the typical mortgage customer was saving just over £588 a month through the payment holiday.
But mortgage payments are only being deferred. The interest that would have been paid, which averages £230 a month, will be added to the outstanding debt and the missed payments will need to be made up at some point in the future.
The payment holiday is only available if you are not in mortgage arrears and have suffered a temporary drop in your income, rather than a long-term reduction in your earnings.
If you face longer-term financial issues, you are advised to contact your lender and discuss what alternative solutions may be available that would better suit your situation.
Banks and building societies continue to face a high volume of calls from people wanting to take advantage of the payment holiday scheme. As a result, many have set up an online application process.
If you are keen to use the scheme, go to your lender’s website and look for the link on coronavirus, which should direct you to a page setting out how to apply.
You will need to have your mortgage details to hand, including your account number.
You will not need to prove that your finances have been directly or indirectly impacted by the coronavirus pandemic, as lenders are allowing people to self-certify that this is the case.
It is important that you do not cancel your mortgage direct debit before a payment holiday has been agreed, as doing so would be classed as a missed payment, which could adversely impact your credit history.
Once a payment holiday has been agreed with your lender, it will not affect your credit score.
Top 3 takeaways
1. More than 1.2 million homeowners whose finances have been impacted by coronavirus have been given mortgage payment holidays
2. Action by lenders means that one out of every nine mortgages in the UK is now subject to a payment holiday of up to three months
3. The number of mortgage holidays in place more than tripled in the two weeks to April 8, with around 61,000 granted each day