SPF Private Clients: There still positives in the payment deferral numbers

Although the number of mortgage payment deferrals taken by borrowers is high, the number who have not used this option should still be seen as a positive, according to SPF Private Clients.

Commenting on UK Finance data that showed there have been 1.9 million mortgage payment deferrals in three months, Mark Harris, chief executive of SPF Private Clients, said: ‘While the headlines are all about one in six borrowers taking a mortgage payment holiday, it is encouraging that the vast majority are not subject to a payment deferral.

However, he did warn that there may be concerns about the necessity of some of the 1.9 million payment holidays that have been taken.

Harris said: "Of those who have opted for a payment holiday, how many are in actual need?

"We have come across borrowers taking them because the option was available and they were worried about running out of money, whereas support from the furlough scheme meant this didn’t come to pass.

"Lenders are contacting borrowers to find out their intentions for the next deferral window - whether they want to take another payment deferral, start repaying the usual amount again or make partial overpayments to correct the shortfall.

"There are several options available and it will be interesting to see what happens at that point.

"Borrowers should ask for advice if they are unsure."

The high uptake might, in part, be due to the widespread use of the term 'holiday', rather than 'deferral'.

Harris said: "While UK Finance correctly refers to a payment deferral, the terminology is not the same across the board.

"Even now some lenders are still referring to it as a payment holiday, which might give borrowers the wrong idea.

"It remains to be seen what happens at the end of the next three-month period.

"By October the furloughed/employment/unemployment picture may be a little clearer - will the government then expect lenders to offer the deferral again?"