Pressured borrowers consider mortgage payment holidays

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by Lin Freestone

Several of the UK’s building societies are reporting that an increasing number of borrowers are requesting, or planning to take, a mortgage payment holiday. Breaks in payments are being taken for up to a year by some homeowners.

This is a further indication of the fact that borrowers are experiencing difficulties coping with rising mortgage rates and increasing household expenses.

Debt charities confirm they see that the trend of the authorised missing of some mortgage payments will continue over the next few months.

In an attempt to make monthly savings, there have been more enquiries investigating the possibility of switching to interest-only loans or the consideration of an extension of terms.

Switching to an interest-only deal on a £150,000 25-year mortgage at 5.5% would cut monthly repayments by nearly £250.

Extending a mortgage term by five years would save approximately £70 a month.

The Council of Mortgage Lenders reports that borrowers who have come off fixed-rate products appear to have managed the adjustment well.