It’s good to talk

Dominic Maher

May 6, 2020

Dominic Maher is COO at Foundation Home Loans

We’ve all seen the recent figures revealed by UK Finance which outlined that one in seven mortgages are now covered by payment holidays following steps taken by lenders to help households whose finances have been affected by the COVID-19 crisis. For the average mortgage holder, the payment holiday amounts to £755 per month of suspended payments.

More than 1.2 million mortgage payment holidays were approved in the first three weeks of the scheme, and hundreds of thousands more customers have been granted payment holidays by lenders in the following fortnight.

Over one-third of all payment holidays approved so far were completed between 25 March and 1 April, as lenders worked quickly to ensure homeowners received the support they need.

The keyword in that final statement is quickly. The speed of the government reaction to these events – at least in terms of the introduction of mortgage payment holidays – has proved to be a timely and positive initiative.

However, this speed has also generated some serious logistical issues for all lenders when handling the volume of enquiries.

From a Foundation Home Loans perspective, we have now granted around 5,000 payment holidays, and I would estimate that the proportion of our total book is probably on par with other lenders.

I believe our approach has been a little different from many and this got me thinking about the synergies between our methodology and how successful intermediary firms are navigating their way through these tough times.

Our main focal point throughout this process has been to make sure that we speak to each and every borrower who has contacted us about a payment holiday.

A strong factor within this is the flexibility of our teams and how we have always been prepared to call upon additional employees from within the business who have worked in the customer services and collections world previously. This agility allowed us to quickly reorganise in a relatively seamless manner, remain in control and offer strong levels of borrower and intermediary engagement.

The argument could be made that larger lenders may not have the ability or flexibility of resources to do this, as you can see from the widespread introduction of online forms and automated processing.

By speaking to all borrowers, we feel that we have been able to develop a better understanding of the many ways in which the Covid-19 crisis is impacting them. It has also allowed us to fully outline the mortgage payment holiday implications. In a number of cases, many borrowers weren’t fully educated on the pros and cons of this and being able to walk them through this process led to some borrowers realising that they didn’t actually need a holiday.

In terms of buy-to-let, it’s no surprise that a greater proportion of our portfolio landlord borrowers have taken a payment holiday. As per the law of probability, they have more properties thus increasing the odds.

On the other side of coin, we have seen less payment holiday take-up from limited company borrowers, and research has shown that landlords whose sole income is from property are the ones most impacted.

And the main take away from this? The more we communicate, the more we all learn. And that will be key to helping our borrowers return to normal when the mortgage payment holidays expire.

We know many intermediaries are talking to their clients and urging them to contact them first. However, some clients may now be triggered into going straight to their lender, meaning that strong levels of engagement and good communication skills have never been more valued.

Although we have seen a slowdown in mortgage payment holiday related calls, they are still occurring, and we believe these will continue for a while longer. So, now really is the time to speak to clients, build on that relationship and get a better grasp of their financial needs. And portfolio landlords represent an ideal starting point for intermediaries with a large database of BTL clients.

Good communication cements strong client relationships and when it comes to payment holidays – as the old BT advert used to say – it’s good to talk.

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