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Bank of England: Loan values rise by 2.9% annually in Q3

Despite a decreasing share of high loan-to-value (LTV) borrowing, mortgage lending remained strong in Q3 with the outstanding value of residential loans up 2.9% compared to a year earlier.

The Bank of England’s (BoE) latest quarterly mortgage lending data revealed there were £1,527.3 billion of mortgages outstanding at the end of Q3.

Meanwhile the value of new mortgage commitments – which is lending which has been agreed to be advanced in coming months – went up by 6.8% when compared to the same quarter in 2019. It reached £78.9 billion, according to the BoE, which is the highest level since 2007.

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The value of gross mortgage advances during the quarter was down 14.7% on Q3 2019 at £62.5 billion.

What’s more the proportion of mortgages advanced during the quarter with LTVs of 90% or more were 3.5% which is 2.4 percentage points lower than a year ago.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “This is no real surprise with many lenders pulling back from this market, and it is only just starting to recover, which is good news for first-time buyers in particular.”

Commenting on the rest of the data he added: “The Bank of England figures show a strong lending market, as we have seen on the ground, with new commitments for the coming months some 6.8% higher than a year earlier.

“There is plenty of business in the pipeline which is working its way through as buyers try to take advantage of the stamp duty holiday. As long as they use good advisers – a mortgage broker and a switched-on solicitor – this should be possible, despite some scaremongering that they are already too late.”

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A ‘precarious’ market

But Karen Noye, mortgage expert at Quilter, thought today’s data painted a ‘precarious’ picture of the housing market at the moment.

“The market is clearly burning bright thanks to the fuel poured on it as a result of stamp duty cut but whether the fire can keep blazing is yet to be seen,” she said.

“The continued increase in house prices is likely to be unsustainable and if the stamp duty holiday is dropped in March and significant economic headwinds as a result of the pandemic start to bite, we may see a very different picture with borrowing and lending being significantly curtailed.”

Noye thought the fact the value of new commitments had increased by as much as 6.8% was ‘worrying’ and ‘should ring alarm bells’.

“While it would be foolish to draw comparisons between the mortgage market now and the one back when the financial crash hit in 2008, we are dealing with unchartered waters and it is worth proceeding with caution,” she said.

By Kate Saines

Source: Mortgage Finance Gazette

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Struggling to get a mortgage? Try a broker… or a small lender

It’s mayhem in the mortgage market at the moment due to a paperwork backlog at banks and pent-up demand from the lockdown.

Lenders are making changes to their home loan deals with little or no notice to limit the amount of business they take on.

So that cheap rate you were eyeing up could quite easily be gone tomorrow. Or the terms and conditions may change suddenly, meaning you no longer qualify for a loan you thought had been secured.

Here are four other places to turn if you are caught up in the chaos…

SMALLER LENDERS

Lee Hockins, from Summit Wealth financial advisers, says: ‘It’s virtually impossible at the moment to get a mortgage at 95 per cent loan to value and there are only a small number of lenders offering 90 per cent mortgages – and none of the big ones.’

Lloyds, NatWest, Barclays, Santander, TSB and most recently HSBC have all pulled out of the market for mortgages with a deposit of 10 per cent or less, hammering first-time buyers.

The good news is that smaller regional building societies may be able to help.

Many still assess applications manually, unlike big banks which often use automated underwriting technology which can result in a computer-generated rejection.

Having your application assessed by an individual means your specific circumstances can be taken into account. Try the Buckinghamshire, the Penrith and Stafford Railway.

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BANK OF MUM AND DAD

Popular mortgage deals that allow parents to help their offspring on to the ladder are being cut back too.

But the Bank of Mum and Dad isn’t entirely closed.

After Lloyds shut its Lend a Hand mortgage to new applicants, the main mortgage designed for parental help is Barclays’ Family Springboard deal.

This allows a family member or friend to put at least 10 per cent of the purchase price in a savings account with the bank in place of a deposit.

Ray Boulger, of mortgage brokerage John Charcol, says: ‘The Barclays Springboard mortgage is the best of the deals for people who are getting help. It’s really good value for first-time buyers with either a small or no deposit, who has someone who wants to help but also wants to keep control of their funds.’

Tipton & Coseley Building Society has launched a Family Assist mortgage offering up to 100 per cent loan-to-value mortgages for buyers, so long as a relative has a 20 per cent charge on their own property or puts 20 per cent of the amount borrowed into a savings account.

But some are limiting the amount of outside help allowed. Nationwide recently changed the criteria for gifted deposits, so borrowers who want a 90 per cent loan-to-value mortgage can only be given 25 per cent of the deposit, meaning they have to provide the rest themselves.

A BROKER ON YOUR SIDE

With banks launching and ditching mortgage deals on an almost daily basis, a broker can really prove their worth.

Not only do they often get tipped off in advance when a deal is about to be pulled, they are clued up on the specific criteria that each lender will look for in your mortgage application – and can stop you wasting time. Brokers will also have a good idea how stretched a bank’s mortgage department will be, helping you avoid disappointment when demand is high.

TRY A LIFETIME MORTGAGE

For the over-55s who are retired or approaching retirement, an alternative option is a so-called retirement interest-only mortgage. Boulger says: ‘With these deals, the eventual sale of the property can be used as the repayment strategy.

‘So lenders assess whether you can afford the loan on the cost of paying the interest only in retirement, as opposed to a repayment deal where you have to pay back some of the capital each month.

‘The downside is that if it’s a joint application, lenders have to decide whether, after one partner dies, the surviving partner would be able to support the mortgage from the remaining income.’

Lenders offering this type of mortgage include Nationwide, Leeds, Bath, Ipswich, Loughborough and Tipton building societies.

…OR LET THE CHAOS PLAY OUT

  • Mortgage rates are expected to remain at current levels for some time – but house prices may not.
  • Many experts believe that while prices are heading up at the moment, there could be a fall back when the stamp duty holiday ends in March next year.
  • Remember, if you are buying and selling at the same time, then a fall in the market is likely to impact both ends of the deal.
  • So you may be no worse off if you wait – and find it easier to borrow the amount you need for your next mortgage.

By Sarah Bridge, The Mail on Sunday

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Accord launches limited issue 90% LTV range for first-time buyers

Accord Mortgages will return to first-time buyer 90% loan-to-value (LTV) lending for two days only next week.

Between 9am on 7 September and 8pm on 8 September, Accord will offer two house purchase mortgages to first-time buyers only, via brokers.

The first is a 5-year fixed rate at 3.59% at 90% LTV with £495 product fee and free valuation. Available for loans up to £500,000.

The second is a 5-year fixed rate at 3.69% at 90% LTV with £495 product fee and free valuation. Available for loans between £500,001 and £600,000.

Jeremy Duncombe (pictured), director of intermediary distribution at Accord Mortgages, said: “We are keen to support the market and we understand the difficulties lack of supply at 90% LTV is causing for both brokers and their clients, with first-time buyers particularly affected.

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“However, with recent lender announcements and a lack of supply in the wider market for 90% LTV products, we fully expect extremely high levels of interest in these products.

“We’re therefore limiting applications to a two-day window to enable us to deliver the high level of service brokers expect from Accord.

“We know that brokers appreciate clarity, honesty and certainty, particularly in these uncertain times and we believe they’ll appreciate the need for lenders to put in place innovative solutions to deliver on demand in this market.

“By communicating our decision today (Friday), it gives brokers as much notice as possible to talk to clients ahead of Monday’s launch.

“The volume of applications across all LTV tiers in recent weeks has meant we have increased capacity in our underwriting teams, with colleagues working incredibly hard to manage service levels and enable us to relaunch mortgages at 90% LTV.

“In order to provide the best possible service, and to allow us to return to 90% lending as quickly as possible again in the future, we’d ask brokers to work closely with us by using the portal in our MSO system for case updates, checking our website for up-to-date service positions before contacting us, and spending an extra few minutes checking and packaging cases before submitting.”

By Jessica Bird

Source: Mortgage Introducer

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Foundation Home Loans enhances residential range

Foundation Home Loans has introduced enhancements, including rate cuts, across its residential product range.

The lender has simplified its range by having rates with a maximum loan-to-value (LTV) of 65%, 75% and 80%.

Previously, the lowest rate of 2.79% was for a maximum LTV of 60% – now the maximum LTV is 65%.

Foundation has also increased its maximum loan size at the lower LTV level from £1.5m to £2m.

At 75% LTV, Foundation has cut all initial residential rates for both F1 and F2 borrowers, reducing its fixed rates by up to 20 basis points and discount rates by 10 basis points.

Products available include:

F1 borrowers: 3.39% 2-year fixed rate – reduced from 3.59%; 3.29% 2-year variable rate – reduced from 3.59%; 3.79% 5-year fixed rate – reduced from 3.99%.

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F2 borrowers: 3.59% 2-year fixed rate – reduced from 3.79%; 3.49% 2-year variable rate – reduced from 3.59%; 3.99% 5-year fixed rate – reduced from 4.19%.

All products have had their initial rates extended by three months – to 31 January 2023 for 2-year deals and 31 January 2026 for 5-year.

The changes follow on from last month’s introduction of 80% LTV versions of Foundation’s 2 and 5-year fixed-rates for both existing borrowers and first-time buyers, plus a new 80% two-year variable discount with no early repayment charges (ERCs).

Jeff Knight (pictured), director of marketing at Foundation Home Loans, said: “The specialist residential market is undoubtedly changing and the likelihood is advisers will be seeing a significant growth in clients who, for many reasons, miss out on the mainstream or will have accumulated credit blips, perhaps as a result of the COVID-19 lockdown.

“Our products are for those with extra-ordinary circumstances, such as multiple income sources through to credit blips.

“These changes simplify our residential range, whilst building on our residential criteria improvements to include a far wider range of complex income types and sources, and we calculate interest-only affordability on an interest-only basis.

“These changes and pricing upgrades mean that Foundation has many competitive options for specialist residential borrowers and we would urge advisers to contact their regional account managers to discuss our offering with them.”

By Jessica Bird

Source: Mortgage Introducer

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Skipton increases mortgage customer numbers by 9,456 in 2020

Skipton’s half year results show the building society has increased its mortgage customer numbers by 9,456 to 226,947 between 31 December 2019 and 30 June 2020.

The society ensured around 95% of its 88 branches remained open at any one time, albeit under reduced operating hours, during the pandemic.

90% of the society’s 1,500 head office colleagues worked from home, providing a contact centre facility for 50 hours every week.

During this period, Skipton achieved a net customer satisfaction score of 87%, compared to 86% as of 31 December 2019.

Skipton recorded underlying profits before tax of £47.9m, compared to £78.9m in the six months until 30 June 2019.

The society arranged more than 22,000 mortgage payment deferrals, and proactively called customers who had arranged a mortgage payment deferral to check they had all the information and support they needed.

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At its peak, 15% of borrowers had a mortgage payment deferral; as at 30 June 2020, this figure had reduced to 5%.

By 30 June 2020, 67% of the Society’s borrowers who had been granted a mortgage payment deferral had reached the end of their deferral period.

Of these, 13% elected to extend their deferral for up to another three months.

Of the remaining 87% who did not extend their mortgage payment deferral, 98% paid the full monthly amount due on their mortgage in the following month.

Group gross mortgage lending was £2.1bn during the pertiod, compared to £2.5bn during the same period the year before.

Mortgage balances grew by 4.7% since the end of 2019, and savings balances grew by 1.4%.

The society helped 12,376 homeowners to purchase or remortgage their properties during the period, including 2,369 first time buyers and 3,627 buy-to-let borrowers.

David Cutter, group chief executive at Skipton, said: “We went into this pandemic in a strong position with healthy levels of capital and liquidity, however undoubtedly profits are lower in a period where our focus has rightly been on the safety and well-being of our customers and colleagues.

“It is testament to the first-rate efforts of our people – all of whom have been impacted like everybody else across the country in so many different ways – that we have been able to quickly adapt and respond to continue to serve our customers well throughout these unprecedented times.

“Our Skipton Link video appointment service and the Skipton app really came into their own during the first six months of the year.

“Video appointments increased fivefold during the period and the number of mobile app users increased to 166,000.

“This enabled our customers to maintain face to face contact with us, together with having access to their accounts from their mobile phone.

“We also managed to help and reassure many more people through our social media and web chat customer services support, noticing big increases in customers reaching out to us through our digital platforms.

“It’s fair to say our financial results reflect a difficult time; our mortgages and savings division has been heavily impacted by increased impairment charges and our estate agency division, Connells, saw all of its UK branches have to close for two months.

“However, the resilience of Skipton’s business model has allowed the Society to maintain strong capital ratios throughout.”

Cutter added: “The COVID-19 pandemic has caused major social and economic disruption, and although the UK government has taken extraordinary steps to support people, public services and businesses, the impact on the general population is colossal.

“Whilst there remain significant uncertainties in assessing the long term social and financial impacts of the pandemic, Skipton remains forward-looking and focused on its purpose of meeting the short and long term interests of its members.

“Profits for the whole of 2020 will be significantly down on last year, and although Connells’ trading has been strong since the estate agency market re-opened, it is not yet clear whether this will be sustained or whether it is just due to pent up demand.

“Forecasting the outlook for house prices, unemployment and the housing market is extremely difficult at this moment in time.

“But the Society remains financially robust with a strong capital position and healthy levels of liquidity, and is in a good position to face the challenges ahead.”

By Jessica Bird

Source: Mortgage Introducer

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Fleet launches 70% and 75% LTV products across core ranges

Fleet Mortgages has launched 70% and 75% loan-to-value (LTV) products across its three core product ranges: standard, limited company and HMO.

On the standard front 2-year fixes are priced at 3.44% for 70% LTV and 3.64% for 75% LTV, both with a 1% fee and an ICR of 125% at 5.5%.

The lender is also offering 5-year fixes priced at 3.74% for 70% LTV and 3.79% for 75% LTV, both with a 1.5% fee and an ICR of 125% at 5.5%.

For limited company buy-to-let 2-year fixes are available at 3.54% for 70% LTV and 3.74% for 75% LTV, both with a fee of 1.25% and an ICR of 125% at 5%.

Its 5-year fixes at 3.85% for 70% LTV and 3.90% for 75% LTV with a fee of 1.5% and an ICR of 125% at the initial rate.

For HMOs 2-year fixes at 70% LTV of 3.54% with a fee of 1.5% and an ICR of 125% at 5.6%, and a 5-year fix at 70% LTV of 3.94% also with a 1.5% fee and an ICR of 125% at the initial rate.

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Fleet said that the introduction of the new products at the higher LTVs follows positive discussions with its funders and its appetite for business would be constantly reviewed in line with ongoing market conditions.

Steve Cox, distribution director of Fleet Mortgages, said: “It’s incredibly positive for us to be able to announce these new 70% and 75% LTV products across the three core areas of our business, and to be offering more options to our adviser and distributor partners, and their landlord clients.

“This is the next step for us as a lender post-lockdown, and it comes as a result of excellent discussions with our funders and their confidence in our ability to deliver these loans.

“That said, the capital markets are not yet near a ‘business as usual’ position as this can’t be a light switch that we can turn on, even with the housing market reopening and especially since physical valuations can now take place.

“Our funders want us to approach this market cautiously and, to that end, our appetite for lending is still going to be subdued, but slowly climbing.

“However, we believe this is good news for the market and means we can begin again to re-engage with intermediaries at a higher LTV level and offer them more options for those landlord clients who are seeking finance.”

By Ryan Fowler

Source: Mortgage Introducer

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Strong mortgage lending in first quarter of the year

The first three months of 2020 saw a rise in mortgage lending before the coronavirus lockdown took hold.

Gross mortgage advances in the first quarter of 2020 totalled £65.8 billion, 3.8% higher than in Q1 2019, the latest figures from the Bank of England show.

This takes the outstanding value of all residential mortgages loans to £1,509 billion at the end of March 2020, which is a rise of 3.9% from a year earlier

The value of new mortgage lending agreed to be advanced in the coming months was 6.1% higher than the previous year, at £67.6 billion.

Almost three quarters (73.2%) of the share of gross advances had interest rates of less than 2% above Bank Rate in Q1 2020. This is 10.2% lower than a year ago and was driven by the 65bp cut in Bank Rate in March rather than any significant change in mortgage interest rates.

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The share of mortgages advanced in Q1 2020 with loan-to-value ratios exceeding 90% was 5.2%,up by 0.7% from a year ago.

Buy-to-let lending, including house purchase, remortgage and further advance, represents a 14% share of gross mortgage lending, unchanged from Q1 2019.The value of outstanding balances with some arrears increased by 1.8% over the quarter to £13.7 billion, and now accounts for 0.91% of outstanding mortgage balances.

Commenting on the figures, Mark Harris said: “The Bank of England data relates to the first quarter of the year when the impact of Covid-19 had not yet been felt.

“While this makes it feel very historic, it does show what might have been had the pandemic not hit, with an increase in gross mortgage advances compared with the previous year, as well as the value of new mortgage commitments.

High LTV

Harris continued: “The share of mortgages advanced to borrowers requiring a loan-to-value greater than 90% was 5.2%, an increase on the previous year, illustrating the level of demand for high LTV deals.

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“With lenders including Accord, Clydesdale and Virgin Money pulling out of the 90% LTV market this week owing to high demand, after only recently returning when physical valuations were once again allowed, there is clearly a need for the big lenders to commit to this market.

“The number of people taking out high LTV mortgages in the second quarter is likely to fall considerably, not due to lack of demand but lack of products available.

A spokesperson for Virgin Money commented: “We’ve been one of only a few lenders offering 10% deposit products, however we have seen strong increases in demand from customers with small deposits.

“To protect the service for existing customers as well as pipeline applications, we are temporarily withdrawing our 90% LTV products. These products will still be available for existing customers looking to do a product switch. This change means we can continue to focus on providing existing customers with the level of service they’ve come to expect.

Buy-to-let

Referring to the buy-to-let figures, Harris said: “Encouragingly, buy-to-let lending was stable, even though the sector has come in for a lot of change on the tax and regulatory front. Investors are adapting to the new environment and tailoring their portfolios accordingly.

“The impact of tenants unable to pay their rent is providing a further challenge for landlords, although of course this won’t be apparent until the second quarter figures.’

By Joanne Atkin

Source: Mortgage Finance Gazette

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Hampshire Trust Bank increases maximum LTV to 75%

Hampshire Trust Bank is raising its maximum LTV on new borrowing to 75%.

All of the Bank’s buy-to-let, HMO and semi commercial deals are eligible up to 65%.

At 70% LTV, borrowing is available on a maximum loan size of £3m and on increased ICR hurdles of 10%, e.g. 125% for a limited company borrower is raised to 135%.

At the new maximum LTV of 75% LTV, the maximum loan size is currently £550,000 (or £750k inside M25) on an increased ICR of 15%.

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At 75% LTV, the borrower must have a buy-to-let track record and have taken no payment holidays across their portfolio. The property must have been used as a rental property recently and new builds and studio flats are excluded.

Charles McDowell, managing director at Hampshire Trust Bank, said: “It is more important than ever that we continually review our lending criteria as more information comes to light. With immediate effect we are increasing our maximum LTV to 75% for the right type of deals – the right properties, the right yields and the right borrowers.”

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Source: Financial Reporter

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Lenders return in week after lockdown

Lenders have reintroduced physical valuations and higher loan-to-value lending after the government gave the green light to restart the housing market in England last week after seven weeks of lockdown.

Accord Mortgages announced today (May 20) that it is accepting residential applications up to 90 per cent LTV following the renewal of physical valuations.

Buy-to-let remortgages are currently available up to 65 per cent LTV, although a spokesperson for Accord said an announcement on this was due on Friday.

Meanwhile, Virgin Money and Clydesdale Bank confirmed “a wider range of products supported with a mix of physical and non-physical valuations” would be introduced next week, including residential mortgages up to 90 per cent LTV and buy-to-let mortgages up to 80 per cent LTV.

Temporary limits on loan sizes and property values will also be withdrawn.

Additionally, physical valuations will be booked in England for pipelines cases with Virgin Money and Clydesdale Bank that require such a valuation.

Some lenders had already resumed offering high LTVs last month. Halifax Intermediaries reintroduced lending up to 85 per cent LTV in April, followed by BM Solutions’ return to buy-to-let lending up to 75 per cent.

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Nationwide also extended lending via brokers up to 85 per cent LTV after focussing support on existing borrowers and processing ongoing applications.

Providers had previously withdrawn high LTV lending after the government announced a lockdown on March 23, which effectively brought the property market to a halt.

Additionally, Nationwide has confirmed that valuers will be able to resume physical inspections this week (from May 18) after the government published its new guidance on moving home.

Likewise, Santander announced the following day (May 19) its valuation partners would aim to contact intermediaries’ clients, or the property owner, by May 29 to arrange a date for cases in England that required a physical inspection and had been put on hold.

It anticipated that most valuations will be carried out before June 10.

Santander said it would be holding rates while increasing the maximum loan size to £1m on some residential products, and to £750,000 on its buy-to-let range.

This followed recent changes from Santander such as raising the maximum LTV for residential lending to 85 per cent, and for buy-to-let remortgage products to 60 per cent LTV.

Meanwhile Leeds Building Society is working with Countrywide to complete the “outstanding minority” of valuations on mortgage applications as physical inspections resume in England.

Jaedon Green, chief customer officer at Leeds Building Society, said desktop valuations will continue to be used where appropriate and “for homeowners particularly concerned about social distancing, we’re also piloting external inspections which mean a valuer will still visit their home but doesn’t need to enter it”.

Specialist lenders have also been adapting to market conditions. As well as resuming physical valuations, on May 19 West One Loans relaunched buy-to-let products at 70 per cent LTV, subject to a maximum loan size of £250,000.

For many brokers the renewal of physical valuations is likely to be welcome news.

Andrew Brown, managing director at Bennison Brown, said the main challenge during lockdown was that an estimated 60 per cent of their cases were not suitable for remote valuation.

Commenting on the return of physical valuations and viewings, Mr Brown said: “It is likely to take some time to clear the backlogs and for consumers to gain confidence but it is the first major piece of good news we’ve had for some time.

“We hope this is the start of the recovery of our sector.”

Some advisers had pointed to issues with undervaluations as remote valuations were carried out during lockdown.

Kevin Dunn, director at Furnley House, said some of his remortgage clients, who had properties valued remotely, felt they would have received a higher figure if a physical valuation had been carried out.

By Chloe Cheung

Source: FT Adviser

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Government to extend mortgage payment holidays

Mortgage payment holidays are likely to be extended past June, according to a report in the Financial Times.

Chancellor Rishi Sunak is said to be in discussions with the banking sector about an extension.

Salman Haqqi, personal finance expert at money.co.uk, said “The government’s initial launch of mortgage holidays brought welcome relief for homeowners who had their income affected by the COVID-19 crisis.

“The scheme, where payment could be deferred with zero negative impact to credit ratings, resulted in up to one in nine homeowners making use of the initiative.

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“Though a formal announcement is yet to be made, many businesses are still closed and the full extent of job losses is still becoming clear, so any extension to the scheme will be welcomed.”

As it stands more than 1.6 million mortgage customers have taken a payment holiday.

The government’s furlough scheme has already been extended until the end of October.

Haqqi added: “Should homeowners wish to look into a payment holiday on their mortgage, it’s important to remember that you will still owe the money and interest will continue to accrue while the deferred payments remain unpaid.

“This means that your monthly payments will likely go up slightly after the payment holiday ends.

“While the option to take a payment holiday on mortgages will have been a lifeline for many, if you are still able to make your payments in full, you should continue to do so.”

BY RYAN BEMBRIDGE

Source: Property Wire