The scheme was introduced in March last year and allowed borrowers to defer mortgage payments by up to six months.
This was due to end in October last year, but new rules from the Financial Conduct Authority said applications for new mortgage payment deferrals would close on 31 March with all payment deferrals ending on 31 July.
According to the latest figures from UK Finance, around 2.9m people took a mortgage payment holiday whilst the scheme was active, and the majority have now returned to making full payments.
This is echoed by the most recent figures from lenders, who are currently reporting their half-year results.
However, as payment deferrals wind up, there are concerns that the removal of this support could lead some consumers to fall into arrears if lenders and advisors do not act quickly.
Smartr365 chief executive officer Conor Murphy said: “It was vital that lenders not only offered mortgage payment holidays to those in need but also did it quickly, given the severity of the financial situations that many found themselves in as a result of the global crisis.
“However, as this temporary lifeline comes to an end, advisers and lenders must now act with a sense of urgency to ensure homeowners do not fall from the safety of the holiday into arrears.”
He continued that the ending of the holiday should being a “renewed focus to vulnerable customers”, especially when it comes to how they are identified and supported.
“A strong CRM system, that allows you to communicate with clients virtually or in-person and keep track of their cases will be key to this. Finding ways to then help those who have been identified as needing additional support is likely to be complex and time-consuming,” he added.
Masthaven’s chief lending officer David Kennedy echoed the need for customers to be supported as schemes were rolled back.
He said: “As these pandemic measures and support schemes are wound down, it’s vitally important that customers aren’t abandoned. Some borrowers may be embarrassed to ask for help or unsure about where to turn.
“Lenders need to be proactive about identifying these customers early and reaching out to them to meet these challenges head on and avoid storing up problems further down the line.”
Kennedy added there could be a surge in customers needing specialist support and more “tailored lending”, which could be a boon for the specialist sector.
“Specialist lenders have coped well with the challenges of the pandemic so far and they have the right people and tools to take a pragmatic and personalised approach to supporting their customers through this next phase. There are certainly big challenges still to come and no one can afford to bury their head in the sand.”
A UK Finance spokesperson said that if customers were still struggling after payment deferrals end, they should contact their lender to discuss and agree on further support, which may include more tailored assistance.
This could include extending the length of the mortgage term, changing the type of mortgage, deferring the payment or interest or sums due or capitalising the interest accrued.
Updated figures from lenders on mortgage payment deferrals
The latest figures from NatWest showed there were around 500 borrowers still on mortgage payment holidays, which is down from 12,000 in the same period last year.
Coventry Building Society noted that up until 30 June this year there were 400 borrowers on a Covid-19 related mortgage payment holiday, down from 34,000 the same time last year. It added that around 98 per cent of affected customers had returned to full mortgage payments.
Lloyds has granted 491,000 payment holidays. Of these 460,000 are being repaid, 2,000 have been extended and 29,000 have missed payments.
Santander supported 256,00 customers with deferrals, but around 96 per cent were now up to date after their payment holiday. It noted that there was a value of £136m in outstanding payment holidays.
Yorkshire Building Society said it gave 40,424 payment deferrals linked to the pandemic, of which 99.5 per cent have resumed repayments.
The Co-operative Bank provided 175,000 mortgage customers until the scheme ended in March. Of those, 98 per cent had now returned to full payment.
Leeds Building Society has said that it supported 28,400 mortgages via the scheme.