If people can’t work they can ask their lender to defer their mortgage payments for three months. Some lenders had already said they would do this, such as Lloyds, TSB and Saffron Building Society.
Commenting on the announcement, Chris Sykes, mortgage consultant at mortgage broker Private Finance, said: “While many holiday plans are in disarray, mortgage borrowers will welcome a break from monthly repayments in the current climate.
“The biggest beneficiaries are likely to be customers who are self-employed or have little saved to help them through these challenging times.
“A mortgage holiday will ease concerns about loss of earnings if people are isolated for any period or if their working hours are reduced due to business closures.
“This flexible relief is an intelligent move for both lenders and borrowers. Lenders will reduce the risk of having ‘bad debt’ on their books if customers miss payments without taking a mortgage holiday, which can reflect poorly on their business and make it harder to raise finance in future.
“Customers can rest easier by avoiding the danger that a missed payment creates a blemish on their credit profile which lasts longer than the current pandemic and limits their borrowing options for three years or more.
“Customers need to be mindful that pre-emptive action will be key to making the most of a mortgage holiday. It will be important to agree deferred payments with their lender in advance, so they are not recorded as missed.”
Sam Harhat, head of financial services at Andrews Property Group, said: “The Government’s backing of mortgage holidays of up to three months for struggling households is clearly welcome but, as ever, the devil is in the detail.
“Exactly how much lenders are onside remains to be seen, as are the logistics of such a major initiative, but on the surface this is exactly the kind of bold action homeowners wanted to see.
“It remains to be seen if the mortgage holiday will extend to landlords who may be struggling if their tenants are in financial difficulty.
“The elephant in the room, of course, is how the Government will be helping the huge numbers of tenants who may also struggle with their rental payments.
“For homeowners, the Government made all the right noises in Tuesday’s media conference but for tenants we need considerably more clarity.”
James Tucker, CEO of mortgage technology provider Twenty7Tec, added: “It’s great to see that the mortgage sector is working with Government at this time of need. Our industry’s virtues of being pragmatic and nimble have come to the fore.
“I’m sure we’ll see more innovations in the area of buy-to-let over coming hours and days and there’s suggestions that this might be something that can be passed on to renters – the current piece of the jigsaw which the Government is trying to tackle.”
