Law firm Parker Bullen has advised mortgage lenders to prepare for a scenario in which 1% of borrowers default on their loans due to redundancies.
The warning comes as employers begin planning for the future easing of lockdown restrictions, and signs that government may be preparing to wind down the furlough scheme.
Mark Lello, partner at Parker Bullen, said: “We’re concerned that borrowers, brokers and lenders are not acknowledging the elephant in the room.
“When the government furlough scheme comes to an end, which it inevitably will for all sectors, early indications suggest we could see 1% of more of workers being made redundant.”
Lello also warned that the market many businesses will return to once lockdown restrictions are eased will be vastly different and require new business models.
He said: “With a dearth of new jobs to go to, people who have been used to years of secure employment could find it very hard to find work in the short term.
“To aid recovery, many businesses will have to adapt and evolve their operating models.
“This may include closing business premises, having fewer support staff or making roles that have proved non-essential during lockdown redundant.
“We’re therefore advising brokers and lenders to plan for the worst and prepare for defaults that may occur over the coming months.”