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The latest on mortgages: Mortgage payment holidays extended while costs increase

Mortgage payment holidays have been extended for homeowners and landlords until the summer. And if buyers want to secure the best mortgage deals, they should act quickly.

The Financial Conduct Authority has confirmed an extension to the mortgage payment holiday scheme until 31 July 2021. The scheme is in place for property owners struggling with payments as a result of coronavirus. It is open to homeowners and landlords or investors with property loans.

Borrowers have until 31 March to apply for the scheme. However, those eligible for and who require a full six-month deferral will need to apply before 31 January. This support will be fully in force from 20 November 2020.

Eric Leenders, managing director of Personal Finance at UK Finance, says: “While it will always be in the long-term interest of customers who are able to do so to resume making payments, all lenders will be providing tailored support for anyone who is still struggling.”

The mortgage payment holiday scheme started at the beginning of the coronavirus pandemic. So far, banks and building societies have granted 2.6 million mortgage payment deferrals. And 140,000 are still in place.

Borrowers should assess mortgage options

The advice from the FCA is that if you can keep repaying your mortgage, you should. There are other options your lender could offer you, including restructuring your mortgage. This could help you avoid accruing added interest when taking a payment break.

Borrowers who have already received a six-month mortgage payment holiday but continue to experience financial difficulty are asked to contact their lender to discuss tailored support. Lenders won’t be enforcing repossession until after 31 January.

Robin Fieth, chief executive of the Building Societies Association, comments: “It’s important that customers discuss their situation with their lender as soon as they become concerned, and before they miss a mortgage payment. Lenders will do everything in their power to help borrowers in financial difficulty at this challenging time – keeping people in their homes is the objective.”

Mortgage product numbers and costs are on the rise

After a steep fall since March, mortgage product numbers are back on the rise. This is providing more choice to homebuyers and investors seeking mortgages. There is still a long way to go before mortgage availability reaches pre-coronavirus levels. However, the sector is moving in the right direction.

The growing product numbers are good news for borrowers. It’s a sign that lenders are gaining confidence. And while there is more choice in the mortgage market, interest rates and fees are also creeping up.

Recent research from Moneyfacts revealed the average product fees are increasing, while the number of deals with no mortgage fees or free valuations are decreasing. However, there are a range of competitive deals still available.

In order to secure the best mortgage deals, buyers are recommended to act now. There is a prospect that interest rates could continue to rise. Moneyfacts advises buyers and investors to speak to a mortgage broker to get the best possible deal.

Eleanor Williams, from Moneyfacts, states: “Those who chose to fix now could not only protect themselves from further potential rate increases – compared to the average SVR of 4.44%, borrowers could save over £132 per month, which over two years could reduce outgoings on mortgage payments to the tune of over £3,000 and fix their monthly payments in the process. This is encouraging news for borrowers who may want to adjust their monthly outgoings and reduce costs where they can.”

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