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Coronavirus: 770,000 households could see their homes repossessed

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Saleha Riaz
·3-min read
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More than one in 10 owner-occupiers do not have enough savings to cover even a single month’s mortgage payments, according to a study. Photo: Getty Images
More than one in 10 owner-occupiers do not have enough savings to cover even a single month’s mortgage payments, according to a study. Photo: Getty Images

EMBARGOED until 22:00 Wednesday 24 February

About 770,000 homeowners are vulnerable to repossession during the pandemic if they have suffered a loss if income, a new report revealed, calling on more government support for those at risk of eviction.

Think tank Social Market Foundation (SMF) analysed official data and found that of the 770,000 at risk of repossession, about a quarter (26%) worked in retail or manufacturing, sectors badly hit by the pandemic.

An independent SMF report funded by the Building Societies Association revealed that the pandemic has reduced the savings of many mortgage-holders.

The report said more needed to be done to encourage wider uptake of mortgage payment protection insurance, to strike the right balance between government-backed and private support for homeowners.

While some have seen savings increase during the pandemic, the SMF said this experience did not reflect reality for many homeowners, particularly those on the lowest incomes and in insecure jobs.

It found that more than one in 10 owner-occupiers do not have enough savings to cover even a single month’s mortgage payments.

Polling of 2,000 mortgage-holders from February 2021, commissioned for the SMF, found that 29% had seen their household savings decrease during the pandemic and that those on lower incomes were more likely to report declining savings.

READ MORE: UK mortgage approvals hit 13-year high in November

46% of mortgage-holders on incomes up to £20,000 ($28,201) said they had seen their savings decline and 14% said they did not have savings to cover even one mortgage payment.

30% said their savings could pay no more than two months mortgage payments.

The report said it was critical of “the erosion of state support for homeowners who are unable to make mortgage repayments because they have seen a reduction of income or lost their job.”

The report noted that the Financial Conduct Authority has banned home repossessions but only until 1 April, while mortgage payment deferrals will cease after 31 July.

It suggested the government introduce a time-limited hardship grant for those suffering a temporary loss of income, to help them keep up with mortgage payments.

The SMF said such a grant – similar to the United States’ Hardest Hit Fund – would better protect households from building up additional financial burdens.

It also said lessons could also be learned from Australia where individuals are able to draw on their pension in times of extreme financial distress.

Scott Corfe, research director at SMF, said: “It’s often observed that the pandemic public health restrictions have allowed many people to pocket extra savings. But our analysis shows this isn’t true for everyone.

"The government needs to prepare for a possible spike in evictions and repossessions, with many of society’s most vulnerable unable to keep paying their mortgage if they suffer a loss of income or lose their job." 

Meanwhile, renters may be struggling as well. Last week, a coalition of landlords, housing groups and charities has warned that the government needs to do more to support renters and avoid them "being scarred" by debts, otherwise more will lose their homes in the coming months, with the risk of an increase in homelessness.

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