This report, funded by the Building Societies Association, explores the subject of “mortgage safety nets” - support for mortgage-holders in the event of loss of income or employment. It considers the implications of the Coronavirus crisis for homeowners and how to strengthen support for mortgage-holders, with almost 800,000 households found to be vulnerable to repossession.
Key points
- Analysis of the Wealth and Assets Survey suggests that prior to the Coronavirus pandemic about 770,000 households were in a financial position that would leave them vulnerable to repossession in the event of a loss of income.
- In a February 2021 Opinium survey of 2,000 mortgage-holders commissioned for this research, 29% reported decreased savings during the pandemic.
- Some 14% or mortgage holders also said they lacked the savings to cover even one mortgage payment. Three in ten (30%) said they could pay their mortgage for no more than two months.
- The UK’s government-backed mortgage safety net has been eroded in recent years; Support for Mortgage Interest (SMI) has shifted from a grant to a loan with the scheme soon to be only available to claimants entirely out of work.
- Learning lessons from countries including Australia and the United States, the UK Government should seek to refine the existing mortgage safety net and offer a time-limited grant and encourage wider uptake of mortgage payment protection insurance.
