Mortgage holidays ‘must show up on credit score’
THE boss of Britain’s biggest building society has argued that homeowners who extend mortgage payment holidays during the pandemic should have it noted on their credit rating.
Joe Garner, Nationwide chief executive, said that while those taking an extended break from mortgage repayments should not have a “big black mark” on their credit rating, it could be a signal that they may not be able to take on more debt.
“If someone is struggling, if there is no sign of that on their credit rating, they’d be in a position where they could go out and take further loans and that wouldn’t be in their interest,” he told BBC Radio 4’s Today programme.
Since the start of the pandemic, the banking sector has approved 1.8million mortgage holidays and 1.5million payment holidays on credit cards and personal loans, according to trade body, UK Finance. Nationwide is providing mortgage payment holidays to about 300,000 customers.
Although thousands are in financial difficulty, Mr Garner said the lockdown and the recent hot spell could trigger millions of house moves as Britons reconsider where they want to live, with many wanting a house with more space and a garden. The building society has found that one in seven people are considering moving as a result of life in lockdown – the equivalent to 3.8million potential house moves.
Mr Garner said that while it was too early to make a prediction on house prices, it was evident that people are “already thinking differently” about where they want to live as a result of working from home and the ongoing period of dry weather.
He made the comments after Nationwide’s annual profits plunged by 44pc to £466 million for the year to April 4 as it warned of rising loan losses due to the pandemic. It has earmarked £110million for expected credit losses.
Despite the profit fall, all staff – excluding senior management – have been given £1,200 bonuses for the year “in recognition of the extraordinary work our people have been doing”, Mr Garner said.