Borrowers currently on a mortgage payment holiday due to Covid-19 will be able to transfer to a new product at their end of their fixed term, says UK Finance.

It adds that those who have been furloughed will also benefit from this industry-wide agreement.

UK Finance says that this builds on the existing industry agreement from July 2018, in which common standards for product transfers were committed to.

Currently over 1.6 million mortgage payment holidays have been offered since the chancellor announced that borrowers would be granted a three-month mortgage break on 17 March, equating to one is seven UK mortgages.

In April alone, almost 700,000 payment holidays were granted, UK Finance says.

Earlier this month, Mortgages for Business warned that most landlords applying for a mortgage payment holiday “don’t need one,” citing sufficient cash reserves in many situations.

UK Finance chief executive Stephen Jones comments: “The industry has acted quickly to support homeowners through this crisis and has taken decisive steps to ensure that eligible customers on payment holidays due to Covid-19 can opt for the security of fixing their monthly mortgage payments.”

Imla executive director Kate Davies adds: “[This announcement] offers additional – and no doubt welcome – reassurance that customers will not be penalised if they have sought an approved payment holiday during this difficult period.”

And BSA chief executive Robin Fieth says: “The Covid-19 situation means that right now times are far from normal and many households are worried about their finances.

“Lenders are working hard to help in a range of ways and it is right that this now includes the ability for those on a three-month payment holiday to be able to switch onto a new product with their existing lender at the end of a fixed term product should the two events coincide.”