Chancellor permits three-month mortgage holiday
Chancellor of the Exchequer Rishi Sunak has announced that lenders are to give a three-month mortgage holiday to those in need during the coronavirus crisis.
The mortgage holiday will be for those missing out on wages due to being affected by the virus.
This was one of several measures made by the Chancellor during a media briefing at Downing Street this afternoon.
Franz Doerr, founder and chief executive of flatfair, said: “It is pleasing to see that the government is taking measures to ensure landlords are protected during this crisis with a three month mortgage holiday.
“Support must also be offered to tenants as well, who may very well be unable to make their payments in the months ahead.
“The impacts of COVID-19 are just becoming visible and it is crucial that everyone pulls together to help us all come through this.”
Sam Harhat, head of financial services at Andrews Property Group, added: “The government’s backing of mortgage holidays of up to three-months for struggling households is clearly welcome but, as ever, the devil is in the detail.
“If this is a smooth and seamless process that will enable homeowners to self-isolate without having to worry about their mortgage payments then clearly it is a significant move in the right direction.
“Exactly how much lenders are onside remains to be seen, as are the logistics of such a major initiative, but on the surface this is exactly the kind of bold action homeowners wanted to see.
“It remains to be seen if the mortgage holiday will extend to landlords who may be struggling if their tenants are in financial difficulty.
“The elephant in the room, of course, is how the government will be helping the huge numbers of tenants who may also struggle with their rental payments.
“For homeowners, the government made all the right noises in Tuesday’s media conference but for tenants we need considerably more clarity.”
Charlotte Nixon, proposition director at Quilter Financial Planning, said that the move by the Chancellor will help allay nerves.
She said: “Many lenders such as Lloyds Banking Group and NatWest have said publically that they are putting in measures to protect their mortgage customers in light of the biggest health crisis this nation has faced in a century.
“However, today’s extra assurances from Chancellor Rishi Sunak that lenders will offer a three-month mortgage holiday will do a lot to quell the nerves of all those currently worried about their mortgage.
At this uncertain time three-months may not be enough for some people but Sunak did mention that this was just the next step of the government’s measures so borrowers may still be set to get more if the crisis is prolonged further.
“Most borrowers will choose not to take the holiday if they are able to avoid it, as delaying also extends the borrowing period, which isn’t normally a good idea unless it is really essential.
“This new option should only be used by those who simply can’t meet repayments because of the crisis and need the breathing space to stabilise their finances.”
And Richard Pike, sales and marketing director of Phoebus Software, warned that the devil is in the detail.
He said: “In what the government describes as a ‘war time scenario’ the Chancellor has announced a three-month payment holiday for mortgage borrowers in difficulty.
“The devil will be in the detail on this one however for lenders that don’t already offer payment holidays as part of their standard terms and conditions.
“Lenders will need to weigh up which borrowers to grant this to, while borrowers will want to know that this doesn’t impact on their credit record.
“With the government’s £330bn of loans funding for lenders shouldn’t be an issue but banks and lenders will surely be glad of the buffers that they have built up over the past few years.
“Be prepared to see arrears figures increase over the coming months as the full economic effect of this issue really kicks in.”
Dave Miller, client account manager at Spicerhaart Corporate Sales, said that this is likely to be the beginning of more government support in the face of a rapidly changing situation.
He added: “Less than a week since the Budget and the government has already been forced to dramatically increase the scale of economic support in the wake of the coronavirus outbreak.
“The threat the Covid-19 virus poses – not just to people’s health but to the economy – is becoming clearer by the day and the government needs to be able to react quickly.
“The additional measures they have announced today will go some way to helping business and homeowners affected by the crisis but, as the Chancellor himself pointed out, they need to be ready to provide more assistance as the situation unfolds over the coming weeks and months.”
A further pledge of £330bn was promised to be made available to UK businesses.
We have a Q&A on the scheme available here.