Office for National Statistics figures on household finances paint a worrying picture of borrowers’ ability to cover mortgage costs once payment holidays end, brokers have warned.

More than a quarter of adults say that the covid crisis is affecting their household finances, the latest weekly survey from the ONS found.

It shows that 26.7 per cent of adults are seeing a financial impact from the lockdown, an increase from last week’s figure of 22.9 per cent.

The main concern for 75.4 per cent of people in this group was a drop in income, with 27.4 per cent saying they have had to use savings to cover living costs and 17.8 per cent saying they had to borrow money from others or take out credit.

Looking to the future, more than four in 10 expect their financial position to get a little or a lot worse over the next 12 months. 

However, a similar proportion expect their financial position to stay the same.

Beyond their own household, more than eight in 10 adults expect the general economic situation in the country to get a little or a lot worse over the next 12 months.

Altura Mortgage Finance managing director Rob Gill says: “The unprecedented economic downturn unfolding due to coronavirus and subsequent hit to people’s incomes could create a whole new generation of mortgage prisoners. 

“Anyone who’s taken a new mortgage in the last few years since affordability understandably tightened post-credit crunch could struggle to remortgage. 

“With lenders under pressure they may not all be able to secure a product transfer either.

“Lessons need to be learned quickly or we risk repeating the same cycle has affected so many borrowers in the last few years.”

Your Mortgage Decisions director Dominik Lipnicki says: “The covid crisis is already having a big financial impact on borrowers everywhere. 

“The truth is that many people were just about managing and the current situation for some is catastrophic. 

“There are many unknowns at present which further dents confidence. 

“If some form of social distancing will exist for another year or two until the vaccine is delivered, many jobs will go and the damage to the housing market could be considerable.”

Lipnicki says that while the government has done much to help furloughed staff, the loan scheme for businesses has been too slow to help many firms.

Many self employed people who paid themselves via dividends or who had an income above £50,000 could be left struggling to pay sizeable mortgages with little or no income, he points out.

Lipnicki adds: “No one knows how many businesses will open again and how many currently furloughed jobs will still exist when this is over. 

“Lenders are already changing the way they are looking at borrowers from certain sectors and borrowers who rely on commission.  

“For the mortgage and housing market, this could yet be more painful than the financial crisis of 2008/2009.”