Increase in payment holidays
Research shows consumers taking payment holidays increased in March 2021
An increase in consumers making use of payment holidays (introduced by the Financial Conduct Authority (FCA) in March 2020 to support borrowers impacted, directly or indirectly, by Covid-19) suggests one in ten borrowers are still concerned about their finances, according to research from Equifax.
Consumers who took advantage of payment holidays were allowed to defer payments for up to six months. The latest data shows that mortgage static balances peaked at 18% in June 2020, and are now back to pre-pandemic levels at 4.3%. However, the number of unsecured loans with static balances hit a pandemic high of 10% in March, overtaking peaks in July 2020 of 8.5% and January 2021 of 7.7%.
Commenting on the research, Equifax UK’s chief data and analytics officer Paul Heywood, said: “As the economy re-opens and many of the pandemic’s emergency support measures are phased out, it’s important we recognise how successful they have been in protecting the financially vulnerable in the UK.
“There are still a few warning lights on the dashboard, and this spike in borrowers requesting payment holidays is a sign that we are not out of the woods yet, but early indications tell us that we have avoided a devastating spike in people defaulting on loans.
“For lenders, identifying people in, or about to enter, financial difficulty is going to be a key theme of 2021, especially as government support is curtailed. While for borrowers, the important thing for people to remember is that the end of these forbearance measures does not mean that there is no support available. A range of tailored support measures have been introduced in the last year, and guidance is readily available for those that need it.”
