Business

Payment holidays granted to 4.4 million to borrowers struggling financially due to coronavirus

Some 162,000 mortgage payment holidays remain in place according to UK Finance.

SOME 4.4 million payment holidays have now been granted to borrowers in the UK struggling financially due to coronavirus, according to a trade association.

Of the 4.4 million payment deferrals granted across mortgages, credit cards and personal loans since the start of the pandemic, 323,700 remain in place, UK Finance said.

Some 162,000 mortgage payment holidays remain in place, down from a peak of 1.8 million in June.

A further 97,300 payment deferrals are in place on credit cards and 64,400 on personal loans.

UK Finance said that as existing support measures come to an end on October 31 2020, the banking and finance industry is committed to supporting mortgage, personal loan and credit card customers facing financial difficulty.

Ongoing support for mortgage customers may include extending the length of the mortgage term, switching temporarily to an interest-only mortgage and deferring interest payments.

Credit card and personal loan customers may still be able to make reduced payments for a further short period if the customer's circumstances are expected to improve.

A longer-term repayment plan may be needed for those in more severe financial difficulties.

Lenders may also consider whether outstanding credit should be refinanced at a sustainably affordable payment rate.

Meanwhile, new research from the City regulator has found that Covid-19 hit the finances of ethnic minorities and young people the most.

The Financial Conduct Authority (FCA) carried out a survey of more than 7,000 people in July. It found that nearly a third (31 per cent) of people have seen a decrease in income, with households seeing income fall by a quarter, on average.

Those from a Black and Minority Ethnic (BAME) background were more likely to be affected, with 37 per cent of BAME adults taking an income hit.

BAME adults are particularly likely to have seen their working hours reduced, while people aged between 25 and 34 are the most likely by far to have had a change in employment as a result of the pandemic, the FCA found.

The research also found that:

- 36 per cent of people who already had low financial resilience and had a mortgage said they are likely to fall behind on mortgage payments.

- The same proportion (36 per cent) of those with loans or credit cards are worried about repayments on these.

- More than two-fifths (42 per cent) of renters are worried about falling behind on rent payments.

On the other hand the FCA said two million people who were not financially resilient had become so since February.

Enjoy reading the Irish News?

Subscribe now to get full access

Business