Mortgage payments have been greatly affected by the economic impacts of the COVID-19 crisis. Job losses and furlough have affected the financial circumstances of many, having a drastic effect on the regular payments. As such a significant life commitment, mortgage payments are often top of the agenda for many families.
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However, it is clear they have borne the brunt of the lockdown measures across the country.
Arrears on many household bills have greatly increased in the last month, but payments in the property market have been significant.
A report released by the Institute for Fiscal Studies (IFS) revealed mortgage payments took a 14 percent drop when compared to payments before the pandemic.
Many people are struggling to keep up with their mortgage payments, and the figures have only reflected this further.
In addition, rent payments have decreased by 11 percent below predicted amounts, and council tax payments dropped by nine percent.
The IFS said: “This represents a further deterioration since April, suggesting some households were increasingly struggling to make ends meet.”
According to research, average UK household earnings also witnessed a nine percent drop from April to May, demonstrating the continuation of financial issues across the country.
This was equivalent to a loss of approximately £160 per month, which could be significant for many people.
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However, the IFS said there were no signs of a recovery, in dire news for the British economy.
The drop in mortgage payments is likely to be explained by the introduction of payment freezes, necessary for many during this time.
Mortgage holidays first began in March, but were recently extended for another three months to help those in need.
The measures were widely welcomed as vital support for the many affected by the COVID-19 crisis.
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However, a wide range of experts have warned Britons to think carefully before taking this option.
Speaking on ITV, Martin Lewis, Money Saving Expert, said: “When you take a mortgage payment holiday, it is not that you don’t have to pay, you’re deferring the payment until later.
“The interest rate whacks up and you still have to make that payment back.”
For this reason, many people may have to face higher bills when they return to paying their mortgage.
This decision could impact finances greatly, and so it is important to consider this before taking the freeze.
John Glen, economic secretary to the Treasury, stated he was in favour of mortgage holidays to provide additional support to Britons at this difficult time.
He said: “We’re doing everything we can to help people with their finances at this difficult time and that includes making sure people get the support they need with their mortgages.
“Everyone’s circumstances will be different, so when homeowners can pay some or all of their mortgage, they should work with their lender on a plan.
“But if they are still struggling, I want them to know that help is there.”
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