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Law360, London (April 14, 2020, 12:33 PM BST ) British lenders have granted mortgage "payment holidays" to more than 1.2 million customers since mid-March, supporting government measures to help households struggling with the economic fallout caused by the COVID-19 crisis, a trade body said Tuesday.
UK Finance said that banks have provided payment breaks for one in nine mortgages since March 17. Lenders announced four weeks ago that they would support homeowners who have lost their jobs or are struggling to make repayments because of the coronavirus pandemic.
More than 1.2 million borrowers have since been offered a payment holiday by their bank, UK Finance said.
"Mortgage lenders have been working tirelessly to help homeowners get through this challenging period," Stephen Jones, chief executive at UK Finance, said. " The industry has pulled out all the stops in recent weeks to give an unprecedented number of customers a payment holiday, and we stand ready to help more over the coming months."
The number of mortgage payment holidays more than tripled, growing from just above 392,000 to 1.24 million, in the two weeks between March 25 and April 8, UK Finance said.
Payment breaks are saving the average mortgage holder £260 ($321) a month in interest payments, the group said. Customers will be allowed to defer payments for up to three months.
Chancellor of the Exchequer Rishi Sunak announced the measure in March as he unveiled a package of government-backed loans worth £330 billion.
Lenders owned by the Lloyds Banking Group, the Royal Bank of Scotland, TSB and Virgin Money have since confirmed they will offer to defer mortgage payments for borrowers struggling to make repayments since the virus outbreak.
The measure allows a fast-track system for approval, but not everyone will be granted a payment holiday. The unpaid interest will still be recovered later, but individual credit ratings will not be lowered as a result of opting into the scheme.
Under Financial Conduct Authority rules, lenders must ensure that any "forbearance" would still result in a full repayment of arrears. Customers will also have to self-certify they have been financially hit by the pandemic.
--Additional reporting by Joanne Faulkner. Editing by Ed Harris.
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