Koodoo finds 77% of borrowers on mortgage payment holidays expect to have their income fully restored
Mortgage Finance Gazette
Mortgage Finance
4 years ago
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This is according to data gathered this month on Koodoo’s mortgage payment holiday calculator, featured on Money Advice Service, Zoopla, Compare the Market, The Times and Money.co.uk.

The fintech found almost 19% of customers believe their income will be partially restored while 4% do not think their income will return by the end of the payment holiday.

Nearly two thirds (63%) of people took advantage of a payment holiday due to reduced income but 29% did so as a precautionary measure against potential income loss. Almost 8% who have taken a mortgage payment holiday have lost all their income.

Based on the data Koodoo suggests that 400,000 customers do not believe their income will be fully restored by June.

It says options such as temporary interest-only periods, or term extensions may be an appropriate solution for the 300,000 customers expecting their incomes to be partially, but not fully restored, while an extension of the payment holiday may only be required for the 100,000 not expecting to have any of their income restored.

Given many customers appear to have taken out payment holidays as a precautionary measure, Koodoo believes that any new guidance issued by the government around payment holiday extensions should be done so in a way that dissuades precautionary payment holiday extensions, while balancing the operational burden on lenders’ contact centres for  assessing customer’s eligibility for extensions.

Seb McDermott, co-founder and CEO of Koodoo, commented: “We have been working with our lender partners over the last two months to develop digital solutions supporting customers through mortgage payment holidays.

“One of the key challenges has been understanding the motivations for taking payment holiday and the current financial health of borrowers.

“The data we have gathered suggests that most customers will see their income restored but it is vital that we develop tailored solutions based on individual borrowers’ needs and that any government guidance takes that into account to ensure those at risk get the right support.”