Borrowers who have to self-isolate because they have been affected by the coronavirus may be able to take a payment holiday if they face difficulties paying their mortgage.
Royal Bank of Scotland (RBS), which also includes NatWest, has said it would offer a three-month payment holiday to those impacted by the outbreak.
Now Italy has announced a suspension on all mortgage payments across the country, which is in lockdown in a bid to manage the effects of coronavirus, there is speculation over how other UK lenders may respond.
UK Finance, the trade body representing the banking industry, said banks, building societies and credit card providers would ‘show understanding’ to customers who contract the virus.
But Habito, the online mortgage firm, raised concerns many borrowers may not be eligible for ‘mortgage holidays’ – where payments can be deferred for a period of time.
Eligibility
Martijn van der Heijden, chief strategy officer at Habito, said: “Right now, it’s fairly commonplace for repayment holidays to be offered to customers who need help with their mortgage, so we expect to see more lenders reminding customers of this facility if they are eligible.
“However, not all lenders offer repayment holidays and it’s likely that it won’t be offered to everyone – for example, those already in arrears, or who have bad credit – unless the government mandates it.”
In Italy, Habito said, homeownership rates were at similar levels to the UK but many more people own their homes outright.
Van der Heijden added: “Here, we have a much higher proportion of homes that are mortgaged – about 30% compared to Italy’s 15% – so the government will have to weigh up all the implications of letting the nine million outstanding residential mortgages, worth a collective £1,486 billion, take a repayment holiday that could last months.”
Support to customers
In a statement last week, Stephen Jones, chief executive of UK Finance said: “Banks, building societies and credit card providers understand that some of their customers may be worried about the effect that contracting the coronavirus (COVID-19) could have on their finances, for example due to a drop in income or because of unexpected expenses or bills to pay.
“All providers are ready and able to offer support to their customers who are impacted directly or indirectly by COVID-19, which could include offering or increasing an overdraft or allowing repayment relief for loan or mortgage repayments: asking for help early is key.
“We would encourage customers who think they may be affected to contact their provider as soon as possible to discuss the support available to them.”
