UK homeowners are proving more resilient than once feared
MORTGAGE support measures introduced by the UK government and lenders amid fears home owners would struggle to pay their bills have proven largely unnecessary so far, according to an analysis by Bloomberg News.
Nationwide Building Society gave support to just 8,000 borrowers via the mortgage charter through December. Overall take-up has been low, according to the UK unit of Banco Santander Lloyds Banking Group, the country’s biggest mortgage lender, saw an initial spike in interest from customers but the number of users remains small.
Home owners have been bolstered by resilient prices, which fell just 1.4 per cent in the 12 months to December, in part because unemployment has remained low despite the economy slipping into recession.
They have also been helped by six consecutive months of declines on the average two- and five-year fixed-rate mortgage deals, according to Moneyfacts Group, on expectations that the Bank of England will cut interest rates this year.
The options introduced in June include a six-month interest only payment holiday, a stay on repossessions for 12 months from the first missed payment and tailored support for struggling customers.
Most lenders had already offered similar services to customers as mortgage providers have largely tried to seizing homes since the 1990s property crash.
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Safeguards built into lending for home purchases after the financial crisis have also helped to ensure customers can make their payments.
“Post-2009 originations, subject to enhanced affordability checks and stress testing continue to be very resilient,” according to a presentation this month by Yorkshire Building Society to analysts.
Just over 1 per cent of homeowner mortgages were in arrears at the end of the fourth quarter, according to data compiled by UK Finance, a lobby group for the industry. Still, there were almost almost 94,000 owner occupied mortgages in arrears of 2.5 per cent of more, a 7 per cent increase from the previous quarter.
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The low take-up numbers for the support measures contrasts with almost two million people granted mortgage payment holidays over the course of three months during the pandemic. BLOOMBERG
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