Like most sectors, the housing market has been put into stasis due to the COVID-19 crisis. According to property portal Zoopla, there are an estimated 373,000 property sales currently on hold while there has been an increase in the number of mortgage holidays which have been taken up. Jonathan Rolande, Director of the Association of Homebuyers, however, stated it was not certain whether credit ratings may change for those who have taken the payment relief.
Speaking to Express.co.uk, he said: “Payment holidays will increase.
“Mortgage rates are low at the moment and they won’t go up hugely.
“I’m told there won’t be an effect on credit ratings.
“But if you’re a lender in the future, you’d take people who didn’t take the holiday.
UK housing: Expert issues credit rating warning
Uk housing: Mr Rolande did admit credit ratings may be affected
“But you can’t say for certain.”
With housing sales put on hold, one in seven UK mortgages are now subject to a payment holiday after banks agreed with the Chancellor to offer relief to homeowners, according to UK Finance, who analyse the banking and finance industry.
Broken down, there have now been 1.6 million of these payments breaks given to customers.
Last month, Chancellor Rishi Sunak announced a three-month mortgage holiday to homeowners.
UK housing: The property market has stalled
After taking the mortgage holiday, for the average mortgage holder, it amounts to £755 per month of suspended payments.
Commenting on the figures, chief executive of UK Finance, Stephen Jones said: “The industry has acted quickly to support homeowners through this crisis and has taken decisive steps to ensure that eligible customers on payment holidays due to Covid-19 can opt for the security of fixing their monthly mortgage payments going forward.
“There is a range of support available to mortgage holders concerned about their finances.”
At the time of Mr Sunak said: “Following discussions with industry today, I can announce that for those in difficulty due to coronavirus, mortgage lenders will offer at least a three month mortgage holiday – so that people will not have to pay a penny towards their mortgage while they get back on their feet.
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Uk housing: Mr Rolande said more mortgage holidays will be taken
UK housing: Mr Sunak spoke of the mortgage relief plan
“I want to reassure every British citizen, this government will give you all the tools you need to get through this.”
Away from credit ratings and mortgage holidays, it is expected UK house prices will fall in the near future.
Jon Bell, a research analyst at Deutsche Bank, told The Times: “UK house prices could fall by 20 percent or more.
“Although prices in London fell by about 32 percent in the recession of 1989/1993, greater than 20 percent would be unprecedented for the UK at large.”
However, with no end date to the UK’s lockdown unclear, it is difficult to predict the housing market going forward.
Although the lockdown period will be reviewed on May 7, it is thought Boris Johnson will only make minor adjustments to the measures.
UK housing: 1.6 million have taken up the relief
Earlier this week, Mr Johnson stated the UK was now at a critical stage.
With that in mind, he asked the country to keep up efforts to adhere to social distancing while First Minister, Nicola Sturgeon who attends the weekly COBRA meetings said, it would be a gradual process.