Rishi Sunak has been tasked with managing the Government’s economic response to the COVID-19 crisis over the 11 months. As part of his plan to help rescue the frozen property market, and assist those with financial struggles, he announced a mortgage holiday scheme alongside the Financial Conduct Authority (FCA) which was quickly taken up by millions. A mortgage holiday allowed Britons to temporarily pause their payments for a three month period, to help them get back on their feet financially.
Mr Coulson continued: “What we’ve also found is that there have been occasions where clients have taken a mortgage holiday, their current deal is coming to an end, and they want to make a product transfer – to simply pick a new deal with their existing lender.
“However, that existing lender may then prevent that product transfer from going through until the mortgage arrears are brought up.
“So the strings were attached at the outset, and they were quite invisible strings to say the least.
“What we’ve seen in the last three months as people have started to move away from the holiday they took back in early 2020 is that there has been a broader impact.”
As some Britons struggle to reckon with the impacts of a mortgage holiday, many will be left with questions.
But for Mr Coulson, the situation may have been avoidable – to a certain extent.
He said: “I think the Chancellor has been a bit naive. Now, I know that might sound a bit crazy, suggesting the Chancellor of the Exchequer has been naive in something which he did.
“However in assuming the best when it comes to banks, experience has taught me that this is probably not the best thing to do.
“If there is an opportunity for a lender to try to say no, or an opportunity for a lender to try to charge someone some more money, then they will probably do that.”
Mr Coulson explained the broker community had been “steadfast” in its approach to mortgage holidays for the most part.
However, those who had experience with lenders, he added, would have known there was a fallout “coming down the road”.
He continued: “At the end of the day, the opportunity to take a mortgage holiday is still there, as has always been the case.
“However, I think now it is less popular, as people are starting to realise its impacts, for example, if they’ve been in conversation with a friend who has ended up on the wrong side of these impacts.”
Britain has now progressed through the shock effect of the pandemic, and is now learning to cope with restrictions and rules.
But this has meant many lenders have toughened their stance to mortgage holidays, Mr Coulson explained.
There is no longer an obligatory approach to extending a mortgage holiday, and to be granted one, Britons will often have to go through a lengthy process – similar to the situation pre-March 2020.
Mr Coulson concluded: “If you call up now and ask for a mortgage holiday, you’ll be put through to the lender’s distress customer line or whatever equivalent they have.
“That will pigeonhole you into a box in the future, where the lender marks you as someone who could potentially have a problem. Therefore, that will impact your ability to borrow more, get a better deal, or another approach.”
Mr Coulson has advised talking to a mortgage broker for further advice, or speaking to one’s existing provider on the matter.
The help for Britons is always available, as Mr Coulson stated, however, it is likely Britons will be taking a far more measured and considered approach to the matter than what may have occurred previously.