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New Covid-19 support package from Nationwide

Nationwide has guaranteed that none of the society’s mortgage-holders will lose their home due to coronavirus.

Nationwide has launched a Home Support Package to help customers struggling financially due to Covid-19.

The society is offering extended support for people financially impacted by the outbreak and has put in place a range of options for both homeowners and tenants.

The move comes after the FCA announced that mortgage borrowers will be able to ask lenders for a second three-month mortgage payment holiday.

In addition to three-month payment breaks for both residential and buy-to-let mortgages, the society is also enabling partial payments such as temporary interest-only arrangements.

The five points of the Home Support Package are:

Commitment not to repossess any homes over the next 12 months

No mortgage member will lose the property in which they live if they are in arrears as a result of Covid-19 and work with the society to get their finances back on track. Nationwide says it will protect homes in this way until the end of May 2021.

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Option to change the way people pay their mortgages

Nationwide is offering flexibility for members in meeting their mortgage payments where they can. Assessments will ensure the best outcome, and timeframe, for people’s circumstances. This could include temporarily moving to interest-only payments to minimise the long-term impact on their finances.

New three-month mortgage payment breaks for those still in financial difficulty due to Covid-19

This would mean a total of up to six months’ support to those most needing it, following an assessment to ensure the hardest-hit customers receive additional support. There will be cases where a payment break is not in the best interests of someone’s circumstances. In these cases, Nationwide will suggest alternatives.

Encouraging landlords to pass on payment breaks to tenants

Nationwide is contacting all its buy-to-let landlord customers to let them know that if their tenants require a rent payment break due to the impact of Covid-19, they can have a mortgage payment break on the property.

Greater focus on housing advice and support

Through Nationwide’s longstanding partnership with Shelter, the society will fund more advisers for the charity’s helpline services which provide specialist advice to those with housing, debt and welfare issues.

Nationwide will also support the introduction of new Shelter community engagement officers, who will provide community outreach for those people that struggle to access support.

Coronavirus support page

New payment breaks – partial or full – will be available via the society’s online coronavirus support page from mid-June.

Members already receiving payment support will be contacted prior to it ending and directed online should they require further support due to ongoing financial difficulties as a result of Covid-19. All payment breaks will continue to accrue interest.

Joe Garner, Nationwide’s chief executive, says: “There is a real need to reassure people, particularly those on mortgage payment breaks who are worried what will happen next. At a time when people are concerned about their jobs, bills and health, we want to do everything possible to ensure they don’t worry about having a roof over their heads. As a mutual, founded to help people into a home of their own, this is what building societies have always been about. We hope this additional support will provide extra flexibility to those who most need it, to help get them back on track.”

Nationwide is also asking the government to consider changes to the way housing support is provided, asking that Local Housing Allowance covers the 50th percentile of rents in any given area rather than the current 30th percentile.

This is something Shelter and the Money Advice Trust have also called for, while also working with Government and other organisations to establish a more consistent and customer-focussed approach to debt collection and recoveries.

Written by: Emma Lunn

Source: Your Money

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1.24 million mortgage borrowers given payment holidays by lenders

More than 1.2 million mortgage payment holidays have been granted to households whose finances have been impacted by Covid-19, UK Finance has revealed.

This means that one in nine residential and buy-to-let mortgages (11.2%) in the UK are now subject to a payment holiday.

For the average borrower, the payment holiday amounts to £260 per month of suspended interest payments. This is calculated using the average interest rate of 2.37% on an average loan size of £132,128 in the UK, as of 31 December 2019.

On 17 March, the Government gave the go ahead for mortgage lenders to allow payment holidays and the number has more than tripled in the two weeks between 25 March and 8 April, growing from 392,130 to 1,240,680.

This is an increase of nearly 850,000 or an average of around 61,000 payment holidays being granted by lenders each day.

According to the Building Societies Association, a quarter of a million of the total figure of 1.24 million is mortgage payment holidays granted by building societies.

The UK Finance figures are grossed up from a representative sample and could be revised slightly as firms identify double-counting and other anomalies in previous daily totals.

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Stephen Jones, UK Finance CEO, 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.”

Robin Fieth, Building Societies Association CEO, said: “We know that this is a difficult time for many homeowners with a mortgage and building society staff have been working hard to offer individuals the right solution.

“For almost quarter of a million so far, that has been a three month payment holiday offering a much needed breathing space to families whose household income is under severe pressure during the current crisis.”

Telephone lines remain extremely busy and lenders have been updating their websites with the latest information on the support available to answer customers’ queries. Many lenders are offering customers the option to apply for a mortgage payment holiday through an online form on their website.

Lenders are also urging mortgage holders not to cancel their direct debits before a payment holiday has been agreed, as this will be counted as a missed payment and could impact their credit file.

By Joanne Atkin

Source: Mortgage Finance Gazette

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UK mortgage approvals jump as political uncertainty eases

Mortgage approvals have risen to their highest level since February 2016, data published by the Bank of England on Monday showed.

The central bank said there were 70,888 mortgage approvals for house purchase in January, a 4.4% improvement on December’s figure and the highest for 47 months. It was also comfortably above analyst expectations for around 68,000.

Remortgage rates also grew, by 3.9% to 52,100.

Net mortgage borrowing by households, which lags approvals, was £4.0bn, slightly below the £4.3bn six-month average. The annual growth rate for mortgage borrowing remained at 3.4%.

Howard Archer, chief economic advisor to the EY Item Club, said: “The data very much fuels the view that the housing market is currently benefiting markedly from increased confidence and reduced uncertainties following December’s general election.

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“A stream of recent data and surveys suggest that the housing market has shifted up a gear after a lacklustre 2019, with particular softness around the third quarter.

“Certainly there is compelling evidence that the housing market has benefited from increased optimism and reduced uncertainties following December’s decisive general election, as well as a greater near-term clarity on Brexit.

“We had been expecting the housing market to continue to benefit in the near term from reduced uncertainties, but it is possible that concerns and uncertainties over the coronavirus outbreak could have an impact.

“We currently expect house prices to 3% over 2020.”

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: “The effective interest rate on all new mortgages dropped to 1.85%, from 1.88% in December, remaining well below the effective rate on the outstanding stock. As a result, the refinancing tailwind to growth in household’s disposable incomes remains on track to strengthen modestly this year. Lower mortgage rates also have underpinned the recover in house purchase mortgage approvals in January.”

The Bank also reported on Monday that the annual growth rate of consumer credit – defined as credit used by consumers to buy goods and services – remained at 6.1% in January. That represented growth of £1.2bn, above both the average seen over the last six months and the consensus, both of which were £1.0bn. The Bank said the rate was “stabilising after the downward trend seen over past three years”.

By Abigail Townsend

Source: ShareCast