Payment Holiday Mortgages 'On The Rise'


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Mortgage lenders Increase number of payment holiday deals

Mortgage lenders have increased the number of deals that contain a payment holiday clause to allow homeowners to take a financial sabbatical, a price comparison site has said.

According to MoneyExpert, the number of mortgages that include a payment holiday has risen from 409 to 629 in the last six months.

Researchers said that the growing number of payment holidays, which allows borrowers to halt their mortgage repayments for an agreed period, demonstrates a greater commitment from lenders to cater for consumer flexibility.

Homeowners attracted to payment holiday plans

Sean Gardner, chief executive, said: “Homeowners who are still looking for good deals may be attracted by the prospect of taking a payment holiday to ease the financial burden if things get tough or if their circumstances change.

"You'd think that the mortgage is the last thing you'd be allowed to let slip, but lenders want you to stay on the straight and narrow and would rather help than hinder. "

However, homeowners are told to bear in mind that taking a payment holiday does not mean interest will cease to accrue over the agreed period.

According to the Council of Mortgage Lenders, a growing number of homeowners are choosing to protect themselves from the risk of interest rate hikes by taking out a fixed-rate mortgage.

Growth Slowest in nine months

House price growth in February was at its slowest in nine months, a leading body has said.

The latest housing market study by the Royal Institution of Chartered Surveyors (Rics) has shown that 24 per cent more surveyors reported a rise than a fall in house prices, which is down four percentage points since January.

At the same time, affordability levels have worsened, with 19 per cent more surveyors reporting a fall than a rise in new buyer enquiries up 13 percentage point increase since the start of the year.

"The interest rate rises have started to worry would-be buyers with many concerned that they will be unable to meet mortgage repayments, " commented Ian Perry, spokesman for Rics.

"Affordability for many will continue to decrease in the coming months as the January rise and further rises take effect. "

Rics’ research follows more optimistic figures from the communities and local government department which shows that house prices rose over the year by 10.9 per cent.

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