An estimated 770,000 households could be vulnerable to repossession if they suffered a loss of income during the pandemic, according to The Social Market Foundation (SMF).
An estimated 770,000 households could be vulnerable to repossession if they suffered a loss of income during the pandemic, according to The Social Market Foundation (SMF).
A report conducted by the think-tank shows that of the at risk households, 26% worked in retail or manufacturing.
The study, which was funded by the Building Societies Association, outlines that more than one in 10 owner-occupiers now do not have enough savings to cover a single month’s mortgage payments.
The Financial Conduct Authority has banned home repossessions until 1 April, whilst mortgage payment deferrals will cease after 31 July.
A poll conducted by SMF reveals that 29% of mortgage holders had seen their household savings decrease during the pandemic.
Looking to those on lower incomes, 46% said they had seen their savings decline.
In addition, 14% said they did not have savings to cover even one mortgage payment and 30% said their savings could pay no more than two months mortgage payments.
The think-tank believes that a time-limited hardship grant would better protect households from building up additional financial burdens.
Scott Corfe, research director at the Social Market Foundation, said: “It’s often observed that the pandemic public health restrictions have allowed many people to pocket extra savings.
“But our analysis shows this isn’t true for everyone and close to 800,000 homeowners could be at risk of losing their home during these turbulent economic times
“With 30% of homeowners seeing a reduction in savings during the pandemic, the government needs to prepare for a possible spike in evictions and repossessions, with many of society’s most vulnerable unable to keep paying their mortgage if they suffer a loss of income or lose their job.
“Ministers should urgently consider a time-limited hardship grant for those at risk of repossession as well as long-term reform of the existing Support for Mortgage Interest scheme.”
Paul Broadhead, head of mortgages and housing at the BSA, added: "With the growth in wealth and income inequality as a result of the COVID-19 pandemic, it’s now more important than ever to look at all possible options that could help homeowners who are struggling to meet their mortgage payments beyond lender forbearance.
“There isn’t one single solution that will support all those in need.
“Stakeholders, including government and lenders, need to work together to ensure that homeowners and families, whether they’re dealing with temporary or longer lasting financial difficulties have the best chance of overcoming their difficulties and enjoy a home which is financially sustainable.
“I hope that the findings in this independent report will stimulate debate and that a range of flexible and compassionate options can be found to create positive futures for those whose prospects may currently feel pretty bleak".
