Coronavirus: mortgage interest rates fall to historic lows

The average cost of a two-year and five-year fixed rate deal is now the lowest on record, making it a great time to remortgage. Here’s why.

The average interest rate for two-year and five-year fixed rate mortgages has dropped to the lowest level since records began in 2007, according to financial information group Moneyfacts.

The average rate charged on a two-year deal is now just 2.09%, while interest rates on a five-year fixed average 2.35%.

This is significantly below the record low of 2.66% that was set only last month.

Why are mortgage interest rates dropping?

The Bank of England has made two emergency cuts to the base rate (the bank’s set interest rate for lending to other banks) in response to the coronavirus pandemic.

These have reduced the base rate to a record low of 0.1%.

This fall in the official cost of borrowing has impacted swap rates (when two different parties swap interest rates), upon which fixed-rate mortgage deals are based.

Lenders have passed on the reduction in their own costs to borrowers.

Despite being able to make mortgage deals cheaper, banks and building societies have had to review the level of risk they take in lending.

This is due to the impact the virus is having on the UK’s economy.

As a result, many lenders have reduced the number of products they offer those borrowing a high proportion of their property’s value. In other words, those who need a mortgage with a high loan-to-value (LTV).

Is it a good time to remortgage?

The record-breaking fall in average fixed-rate deals makes it a great time to remortgage Especially if your current mortgage deal is coming to an end.

This is the same for those sitting on their lender’s standard variable rate (SVR).

The typical interest rate charged on an SVR is around 4.5%.

This means that homeowners could save more than £3,135 a year if they switch to an average two-year fixed rate deal of 2.09%, based on a £200,000 mortgage.

The gap between the cost of a two-year and a five-year fixed-rate deal has also narrowed.

So homeowners now pay a lower premium for the security of knowing what their mortgage repayments will be for five years.

Mortgage choice for homeowners has taken a dip

The number of different mortgages homebuyers can choose from has more than halved. It’s dropped from 5,222 products on 20 March to just 2,566.

The situation is particularly tight for people looking to borrow a high proportion of their property’s value.

The number of two-year and five-year fixed rate mortgages for homeowners with only a 5% deposit has dropped from 279 to just 22. Choice for those with a 10% deposit has declined from 563 to 50.

What are the options for people with small deposits?

A total of 72 mortgage products are still available for people with only 5% or 10% to put down.

Although lenders have increased rates on loans for people borrowing 95% of their home’s value,(raising the cost of five-year fixed rate deals by 0.04% and two-year ones by 0.1%) the rise is very small.

This suggests they are still open for business for this sector of the market.

Lenders have cut rates for people borrowing 90% of their property’s value. This indicates competition is still strong in this area, albeit on a reduced product range.

If you only have a small deposit and are struggling to find a mortgage, consider using a mortgage broker.

They’ll be able to scour the whole market on your behalf and help you find the best deal.

This is not just in relation to rates and fees, but also taking into account the likelihood of your application being accepted.

A mortgage broker will also be able assist you with the application process.

Top 3 takeaways

• The average rates for two-year and five-year fixed-rate mortgages have dropped to the lowest level since records began in 2007

• The typical rate charged on a two-year deal is now just 2.09%, while interest rates on a five-year deal average 2.35%

• But the number of different mortgages available has dropped from 5,222 products on 20 March to just 2,566

by Blackstones

It’s time to restart the housing market - by the Rt Hon Robert Jenrick MP

The Secretary of State for Housing, Communities and Local Government on why a home is more than just four walls

In a column exclusive to Zoopla, Robert Jenrick shares his vision for restarting the housing market and recovering from the coronavirus crisis.

As the Prime Minister announced this week, we have now moved into the next phase of our fight against coronavirus. As with so many aspects of our lives, many people across the country have had their plans and dreams of moving home put on hold throughout this crisis. We’ve also seen important work to build the homes we need paused.

We made this difficult decision in order to keep the country safe, but thanks to the hard work and sacrifices of British people during the lockdown, we are now able to begin easing some measures in a way that is safe.

Since March, more than 450,000 buyers and renters have been unable to progress their plans to move. As of yesterday (13 May), those waiting patiently to move can now do so, though those self-isolating or with coronavirus should continue to keep their move on hold.

Back in business

Each of the building blocks of the buying and selling process are now back in business. The foundation for this is our new guidance on moving home while staying safe, including keeping a two-metre distance.

Estate agents, conveyancers and removal firms can also reopen if they follow social distancing guidelines. This is aided by our guidance for people working in homes, including fitters, so they can support home moving while reducing the risk of infection.

Underpinning all this is our work to restart and renew home building, with safety at its core.

I am grateful to everyone who has been carefully preparing to return to work over recent weeks. Thanks to these efforts, this week we were able to launch a Safe Working Charter with the Home Builders Federation, committing developers to returning to work while following stringent health advice.

We’re also allowing builders to agree more flexible working hours on site with their local council. This will make it easier to follow public health guidance on sites and stagger builders’ arrival times, making public transport less busy and so reducing the risk of infection.

A clear plan forward

Taken together, this forms a clear plan to ensure that everyone involved in moving home and building homes can begin their return to normal life, safely.

As week-by-week we continue to defeat this disease, we will stick to our long-term vision for the housing market we all want to see: safe, beautiful, high-quality, affordable homes, and more of them.

Because a home is more than just four walls. As we have found more than ever during this crisis, it is a sanctuary, a form of protection, and a link to your community.

Everyone has a role to play in helping to control the virus by staying alert and following the rules.

We all need to work together safely as we rebuild our economy and restore livelihoods, starting with the housing market. If we do this together, we will recover from this crisis.

by Blackstones

Coronavirus Q&A: how to move home safely now the property market has reopened

The property market in England has reopened and people can move home again. We look at key government information homemovers need to know right now.

The property market in England has reopened and people can move home once again.

But any moves must adhere to government guidance aimed at keeping everyone safe during the pandemic.

We take a look at questions and answers homemovers need to know to comply with new government rules.

Q. Does the reopening of the housing market mean it is business as usual?

A. No, the lifting of the restrictions on not moving does not represent a return to normality.

Instead, the process of finding, buying and moving home must be adapted to reduce the risk of spreading the virus.

Changes include carrying out as much of the process online as possible.

Homemovers will be expected to mostly continue with virtual viewings rather than physical ones. Sellers may need to vacate their homes while potential buyers are shown around. And properties will need to be  thoroughly cleaned before the new owners or tenants move in.

The government has also warned that it may be necessary to pause all home moves again in the future to manage the spread of the virus.

Q. How do I move safely during the pandemic?

A. While moves are now allowed to go ahead, social distancing continues. Everyone must continue to follow the guidance issued by Public Health England.

In practice, this means you must stay at least two metres away from anyone who’s not a member of your current. household. And you should continue to wash your hands frequently.

You must also isolate yourself immediately if you develop any coronavirus symptoms.

Those considered to be clinically vulnerable should continue to self-isolate, and not move home unless it’s absolutely necessary.

If you’re in a property chain with someone who’s deemed to be vulnerable, you may have to put your moving plans on hold.

Q. How does social distancing work with people from removals firms?  

A. You must stay at least two metres away from people helping you move.

You should also clean your furniture and other items before removals professionals arrive and after they’ve left. This will minimise the risk of transmitting the virus.

Try to do as much of the packing yourself as you can.

Before removal crews come to your home, you should open all internal doors.

All parties should wash their hands frequently and dry them on separate towels, or disposable paper towels.

You should not provide any refreshments for removal crews.

Q. What are the social distancing rules?

A. Social distancing rules must be followed during in-person viewings and meetings with agents in person. These include:

• Washing your hands when you enter a home
• Bringing and using hand sanitiser
• Not touching any surfaces
• Keeping windows open in homes to air out the rooms
• Ensuring everyone maintains a two-metre distance from one another

Q. Is there a limit on how far I can move geographically? 

A. There’s no limit on the distance you can move within England. As long as you follow public health guidance while you do so.

But the reopening of the housing market only applies in England. So a move to or within Scotland, Wales or Northern Ireland is currently not possible.

Q. Can I still move home if my housemate has coronavirus symptoms?  

A. If anyone within your household develops coronavirus symptoms, it’s important to put your move on hold and isolate yourself immediately.

If you’re contractually committed to moving home, you should still delay your move until all members of your household have come to the end of their self-isolation period.

This will minimise the risk of transmitting the virus.

Make sure you inform your landlord or letting agent if this is the case.

Q. I’ve tested positive for coronavirus but I feel fine. Can I still move if I follow all the guidelines?

A. No.

Even if you’re not experiencing any symptoms of coronavirus, known as being asymptomatic, you can still infect others.

If you’ve tested positive, it’s important that you and other members of your household stay at home and self-isolate.

Any move must be put on hold until the isolation period is over.

If you’re already contractually committed to moving, the move must still be put on hold and you should work with other people in your chain to agree a new date.

If you absolutely have to move - for example, there’s an urgent health and safety risk at your current property - you should contact Public Health England or your local public health team for advice.

Q. Can I view properties in person again now? 

A. Yes, physical property viewings are allowed to take place again.

But it’s important that all parties involved follow public health guidance and take steps to minimise the risk of infection.

Viewing numbers should also be kept to a minimum. They should only involve members of the same household. It’s best not to bring small children if possible.

Even so, initial viewings should still be done virtually if possible.

Estate agents are open again and they can accompany potential buyers on viewings. But they must follow the public health guidelines too.

Show homes are also open and will operate an appointment system for viewing to avoid overcrowding.

Open house viewings are currently not allowed.

Q. I’m a renter, should I let my landlord organise viewings?  

A. The government expects landlords and tenants to work together to help people to move home in a safe way.

Your landlord must give you fair warning about any viewings.

Those involved in the viewing must follow the public health guidelines.

If you or anyone in your household develops coronavirus symptoms, viewings must be cancelled until everyone has come to the end of their self-isolation period.

Q. Can I still have a survey done on a property I want to buy?

A. Yes, you can still have a survey carried out.

But surveyors will be expected to follow the same rules as those viewing properties.

This means they should maintain a distance of two metres from others, frequently wash their hands and not attend the property if they have symptoms of coronavirus.

You can visit a property you’re buying if you wish to take measurements.

But such a visit must be agreed with the seller and be conducted according to the public health guidelines.

For more information, read the official government guidance on moving home during the coronavirus outbreak.

by Blackstones

Coronavirus: property market reopens for business

Estate agents are open and people can once again move home and view properties

The housing market in England has reopened for business after being shut down in a bid to slow the coronavirus pandemic.

From today, government advice states that estate agents can reopen their offices, potential buyers can view properties and people can move home.

Removal companies and other essential elements of the sales and letting process, such as surveyors and conveyancers, can also re-start work right away.

Reopened property market will boost economy 

Charlie Bryant, chief executive of Zoopla, said: “Opening up the housing market is not just great news for home-hunters and estate agents.

“As well as unlocking £82 billion of housing sales stalled in the pipeline, it will provide an all-important boost to the real economy, as housing sales trigger increased spending through builders, tradespeople, removal firms, solicitors and many more.”

He added that before the coronavirus lockdown, the housing market was enjoying its strongest start to the year since 2016.

“By taking these steps, the government will give confidence to buyers, sellers and renters that Britain is reopening for business and they can do their bit to get the economy moving again.”

What does the market reopening mean for buyers?

Zoopla estimates that 373,000 property transactions were stalled due to the government’s lockdown measures.

These can now resume in England, with solicitors and conveyancers allowed to carry out their work as long as they follow social distancing guidelines.

Once a transaction has been completed, buyers will be allowed to move into their new home.

Those who have not yet found a property they want to purchase will be allowed to view homes in person, but they must comply with social distancing guidelines. This means staying two metres apart from whoever’s hosting the viewing.

What if I want to sell my home right now?

Following today’s announcement, estate agents will once again be able to visit your property to conduct an appraisal and take photographs for a listing.

Interested buyers will also be allowed to view your home in person, as long as social distancing guidelines are observed.

Even so, many estate agents are expected to continue to also offer virtual viewings. These have proven popular with buyers during the lockdown period.

What if I want to purchase a new-build home?

Building rates have slowed down as a result of social distancing measures. This has limited the number of people allowed to work on construction sites.

The good news is that in a bid to help construction firms catch up, the government is allowing builders to agree more flexible construction site working hours with their local councils. Showhomes can also reopen.

The government and the Home Builders Federation have launched a new charter to help construction sites operate in line with the latest health and safety guidance.

For new sites, developers and local councils will be allowed to publicise planning applications through social media. This is instead of using posters and leaflets and should speed up the process.

There will also be support for smaller developers, such as allowing them to defer payments to local councils to help ease cash flow pressures.

All of these measures should help the construction of new homes get back on track. This is particularly important for people planning to purchase a home through the government’s Help to Buy scheme.

What does the market reopening mean for estate agents?

The halting of the property market was set to cost estate agents £1 billion in lost commission.

Now that the market is restarting and stalled transactions going through, they should be able to start recouping some of this revenue.

Andy Marshall, chief commercial officer at Zoopla, said: “We’re delighted that the government has recognised the need to restart the property market, permitting estate agents to operate - within the parameters of common sense social distancing.

Now is the time to get the market moving and to restore it to full health.”

He added that Zoopla had two payment plans to help estate agents. For at least the next five months, agents who subscribed to one of these offers would be able to rebuild their revenue pipeline without shelling out on a portal.

“We welcome the opportunity to discuss plan options with any agents who have not signed up,” he said.

Families can move into new homes if done safely

Housing Secretary Rt Hon Robert Jenrick MP said:

“I know this has been a difficult time, with some families unable to move and feeling stuck in homes no longer suitable for them.

“Now we are past the peak of the virus we are now able to safely adapt some of the restrictions so that from today anyone in England can now move home as long as this is done safely.

“I thank everyone visiting Zoopla for their patience over the last few weeks and ask them to follow the public health advice as they search for their new home."

Top three takeaways

• The housing market in England has reopened for business after being shut down in a bid to slow the coronavirus pandemic
• From today, estate agents can reopen their offices, potential buyers can view properties and people can move home
• Removal companies and other essential elements of the sales and letting process, such as surveyors and conveyancers, can also re-start work with immediate effect

by Blackstones

Coronavirus: will new lockdown measures impact your property purchase?

While new coronavirus lockdown measures do not directly address the property market, they mean positive change for potential homebuyers

The housing market is set to stay on hold for at least three more weeks despite relaxed coronavirus lockdown measures.

But the new measures could mean positive change for potential homebuyers and property browsers.

Government announces relaxed lockdown measures

Prime Minister Boris Johnson announced a series of measures on Sunday night. The aim is to enable a gradual reopening of society following the coronavirus pandemic.

These measures include allowing employees who cannot work from home to return to workplaces. Though they should avoid public transport. People are now also allowed to spend more time outdoors and travel further from their homes in their cars.

No specific measures were announced to help get the property market moving again.

Instead, it’s assumed that estate agents are in the same category as shops and will have to wait until 1 June before they can re-open their branches.

It remains unclear when viewings and new instructions will be able to start again.

Buyers can browse potential areas more easily

Despite no specific measures in place for the property market, the latest coronavirus lockdown measures are positive for potential homebuyers.

With unlimited outdoor exercise now permitted, as well as long car journeys, homemovers can scope out areas of interest more easily.

They can also check out the outside of properties that they could previously only view online.

Keeping your property purchase moving right now

Under current government guidelines, people have been asked to delay property transactions until after social distancing measures have been lifted.

But if the property you’re moving into is currently empty, you can still go ahead with the move.

In other circumstances, movers have been asked to work together to agree on a new completion date.

Virtual viewings have taken off

Estate agents can work from home and continue to market properties they already have on their books.

What they cannot do is visit homes to take photographs, conduct appraisals for new listings or show prospective buyers around a property.

Instead, many have turned to virtual viewings to enable people to view homes while in lockdown.

The types of virtual viewing available for homebuyers vary between different estate agents.

Others involve agents taking their own videos as they walk around a property and highlight its key features.

What does the future of the property market look like?

Even when things ‘return to normal’, the property market could look quite different.

Now that virtual viewings have become more popular, it’s likely agents will carry on doing them. Video tours could save time for homemovers and estate agents.

The use of technology gives people an insight into whether or not a property will meet their needs without having to book a physical tour.

Calls for stamp duty holiday to kickstart the market

There’s evidence to suggest there’s pent-up demand from homebuyers and sellers.

But industry bodies (such as The Royal Institution of Chartered Surveyors and The National Association of Estate Agents) have called for a stamp duty holiday to help kickstart the market.

This stamp duty holiday could boost confidence among potential buyers and encourage housing growth in 2020 and beyond.

Top three takeaways

• The housing market looks set to stay on hold for at least three more weeks despite an easing in other lockdown measures

• Estate agents are thought to be in the same category as shops and will have to wait until 1 June before they can re-open their branches

• But relaxations in exercise rules give potential buyers more scope to explore areas they like in person

by Blackstones

Coronavirus: Property browsing bounces back across the UK

Property browsing has bounced back across the UK after the initial impact of the coronavirus lockdown in March.

tep aside Netflix, homebuyers are spending an increasing number of hours property browsing online right now.

This nationwide increase in property browsing suggests homebuyers are preparing to move after lockdown. The bounce back reflects a positive change in the market during these challenging times.

Browsing levels have risen steadily since March dip

During April, levels started to rise again, as potential buyers explored options for their next home move.

A breakdown of the data shows that all UK regions have followed broadly the same trend when it comes to property browsing.

During May, browsing activity fell by a half as everyone adjusted to the new normal in lockdown.

But since then, browsing levels have been rising steadily. And online engagement is now only around 30% below the high levels we saw on 1 March.

by Blackstones

Tax changes for landlords come into force

The start of the new tax year brings changes to mortgage interest tax relief and capital gains tax for buy-to-let landlords.

Landlords face more taxation changes from April 6 2020, with the phasing out of mortgage interest tax relief reaching its final stage and capital gains tax adjustments.

The start of the new tax year has seen mortgage interest tax relief scaled back further, while landlords who sell a property also now have less time in which to pay capital gains tax.

People who previously lived in a property that they later rented out have also seen tweaks made to the tax reliefs they can claim.

The changes to mortgage interest tax relief, which were well flagged in advance, have been blamed for many landlords exiting the sector in the past couple of years.

These are the main changes landlords need to know about:

Mortgage interest tax relief

The government has been in the process of tapering down mortgage interest tax relief since 2017 and gradually replacing it with a new system.

Before April 2017, landlords could claim mortgage interest tax relief on 100% of their mortgage interest costs. The amount they could claim was gradually reduced to 25% last year.

But under the new system, which comes into force on 6 April 2020, the relief has been phased out completely and replaced with a 20% tax credit for mortgage interest.

Changes to mortgage interest tax relief will affect around 55% of landlords who have one or more buy-to-let mortgages.

However, industry bodies have said the changes have caused some landlords to stop expanding their portfolios or even sell some of their properties.

Capital gains tax payments

Capital gains tax is paid on the profit people make when they sell a property that is not their primary residence.

The tax is charged at a rate of up to 28% on the difference between the property’s purchase price and its sale price, after deduction of the personal allowance. This personal allowance is £12,300 in the 2020-2021 tax year.

Landlords have previously had to declare capital gains tax liabilities in their annual tax return, giving them more than a year in which to settle the bill.

But from April 6 2020, they will need to declare and pay the tax within 30 days of selling a property.

Capital gains tax relief reduction

The changes to capital gains tax do not end there, with changes also made to capital gains tax relief for landlords who previously lived in their investment property.

Under private residence relief, landlords could exclude the years in which they lived in their property when calculating their capital gains tax liabilities.

They also did not need to include the final 18 months for which they owned the property in the calculation, even if they did not live there during this period.

But under the new rules, this 18-month period has been halved to nine months, increasing landlords' capital gains tax liabilities.

Rules around letting relief have also been tweaked. Previously, landlords were able to claim capital gains tax relief of up to £40,000, rising to £80,000 if the property was jointly owned by a couple, when they sold an investment property that was previously their home - even if they had not lived in it for many years.

But from April 6 2020 landlords will need to be living in the property themselves when they sell it to claim this benefit. This effectively removes the relief for the majority of landlords.

Top 3 takeaways

1. Mortgage interest tax relief has been phased out and replaced with a 20% tax credit for mortgage interest

2. Landlords now need to declare and pay capital gains tax within 30 days of selling a property

3. Capital gains tax relief for landlords who previously lived in their investment property has also been scaled back.

by Blackstones

Coronavirus: Mortgage approvals impacted by social distancing

Mortgage approvals have fallen due to the impact of social distancing. But here’s how to move forward with your property purchase right now.

Mortgage approvals for house purchases slumped to a seven-year low in March as social distancing measures impacted the housing market.

The slump comes after mortgage approvals for house purchases hit a five-year high in February. It was clearly caused by the measures announced by the Government during March to combat the coronavirus pandemic.

A total of 56,161 loans were agreed for people buying a home in March, the lowest level since 2013, according to the Bank of England.

Why are mortgage approvals suffering?

Social distancing measures were first introduced in the UK in the middle of March.

Lockdown came into force on 23 March. But it was not until 26 March that the government published guidelines asking people who were in the middle of a property transaction to delay exchanging contracts.

As such, the virus is only likely to have impacted figures during the second half of March. So it’s likely that the main impact was during the final week of the month.

Can I still move house during coronavirus?

Coronavirus rules on moving house are not simple.

If the move is considered critical and you can’t agree on another date, you can go ahead so long as no-one involved is self-isolating or showing symptoms of coronavirus.

In light of the current circumstances, banks and building societies have agreed to extend mortgage offers beyond the traditional three-month deadline for customers wanting to buy a home.

If you think you will not be able to complete your purchase within three months of your lender agreeing your mortgage, contact them to ask for an extension.

How do I move forward with my house purchase right now?

You may be able to move forward with your house purchase if it’s currently empty.

But if the property is occupied, everyone involved in the transaction has been asked to try to agree a new moving date once the current lockdown measures have been lifted.

Virtual viewings keeping transactions moving

But some buyers and sellers are keeping transactions moving as much as possible with virtual viewings.

The types of virtual viewing available vary between different estate agents.

Some have used 3D cameras that enable house-hunters to take a self-guided tour around a property using their mouse to do everything from standing at the kitchen sink and looking out of the window, to measuring the size of wardrobes in the bedroom.

In other cases, agents have taken their own videos as they walk around a property themselves.

Virtual viewings are taking off as home-hunters continue to look for new properties during the coronavirus lockdown.

Estate agents' use of technology is proving so popular with would-be buyers and renters that some are willing to put in an offer to buy or rent a home on the strength of the virtual viewing alone.

Find out more about virtual viewings.

When will lockdown measures be lifted?

The Government has not yet put a date on when the current lockdown measures will be lifted.

Instead it has set five key tests that must be met first. The current restrictions will then be “gradually refined”.

Details on how this next phase will play out are expected to be published in the coming days.

In the meantime, while property transactions may be largely on hold, prospective buyers can still search the market for their next home.

Estate agents have been quick to respond to the situation. Many have introduced virtual tours to enable people to get a good feel for a property even if they cannot currently view it in person.

Top three takeaways

• Mortgage approvals for house purchase slumped to a seven-year low in March as social distancing measures hit

• A total of 56,161 loans were agreed for people buying a home in March, the lowest level since 2013

• Banks and building societies have agreed to extend mortgage offers beyond the traditional three-month deadline for customers buying a home

by Blackstones

Coronavirus: one in seven mortgages in the UK covered by payment holidays

Customers who've come to the end of their existing mortgage deal can move to a new one, even if they're currently on a payment holiday or have been furloughed.

More than 1.6 million homeowners whose finances have been impacted by coronavirus have been given mortgage payment holidays.

One out of every seven mortgages in the UK is now covered by the scheme, under which people are able to suspend their repayments for up to three months.

The move is saving the average homeowner £755 per month, according to mortgage trade body UK Finance.

Lenders are also allowing customers who have come to the end of their existing mortgage deal to move to a new one, even if they are currently on a payment holiday or have been furloughed.

Under normal circumstances, customers who were not up to date with their regular mortgage payments would not be allowed to transfer to a new deal.

Stephen Jones, UK Finance CEO, says: "Lenders understand that many households are seeing their finances squeezed due to the coronavirus pandemic and we are working hard to help customers get through these tough times."

What is a mortgage payment holiday?

On 17 March, the chancellor Rishi Sunak said mortgage lenders had agreed to allow customers whose finances had been impacted by coronavirus to take a payment holiday of up to three months.

But the mortgage payments are only deferred, and the interest that would have been paid is added to the outstanding debt owed, while the missed payments will need to be made up at some point in the future.

More than 1.2 million payment holidays were agreed during the first three weeks of the scheme.

How do I apply for a payment holiday?

If you want to apply for a mortgage holiday, go to your lender’s website and follow the link on coronavirus.

After being inundated with requests in the early days of the scheme, many lenders have set up an online application process.

You will need your mortgage details to hand, including your account number, but you will not need to prove that your finances have been impacted, as lenders are allowing people to self-certify this.

Do not cancel your direct debit before the payment holiday has been agreed, as this would be classed as a missed payment and could impact your credit history.

A payment holiday is only available if you are not in mortgage arrears and have suffered only a temporary drop in your income, rather than a long-term reduction in your earnings.

If you face longer-term financial issues, contact your lender and discuss what alternative solutions may be available that would better suit your situation.

What if my current mortgage deal is coming to an end?

When your mortgage deal comes to an end you would usually automatically be put on to your lender’s standard variable rate, which typically charges a significantly higher interest rate, unless you remortgage to a new deal.

If you do switch to a new deal, you would have to go through new affordability checks and people who had been furloughed or who were on a payment holiday would not qualify.

Under the current circumstances, however, lenders have agree to waive these rules.

Stephen Jones says: "The industry has acted quickly to support homeowners through this crisis and has taken decisive steps to ensure that eligible customers on payment holidays due to COVID-19 can opt for the security of fixing their monthly mortgage payments going forward."

by Blackstones

Coronavirus: what it means for mortgages

While one in nine homeowners have taken a mortgage holiday, the UK's lowest ever interest rate means it's worth keeping a close eye on mortgage deals available to you.

What’s happening in the mortgage market?

In March 2020 the Bank of England made two emergency cuts to the base rate, The cut from 0.25% to 0.1%, made in response to the coronavirus pandemic, means the base rate is at its lowest level in the Bank’s 325-year history.

In the immediate aftermath of this reduction, banks and building societies withdrew some of their mortgage products.

Among the most common deals to be pulled were tracker mortgages and loans for people borrowing a high percentage of their property’s value.

The number of different deals available has continued to fall in April, dropping from a total of 3,192 mortgage products at the start of the month to 2,548 now.

The good news is that lenders that had pulled products are beginning to launch new deals for both fixed rate and tracker mortgages.

Eleanor Williams, finance expert at Moneyfacts, said: "It’s very positive that we are beginning to see providers return products to their ranges and launch new deals, including some in the higher loan-to-value sectors.

"These changes may be an early indication that lenders have begun to adapt to the exceptional economic and operational changes of recent weeks in order to continue supporting their customers, and that hopefully more providers will be following suit in the days ahead."

How much choice is there if I'm looking for a new mortgage deal?

While the number of deals available has continued to fall since the beginning of April 2020, there are still more than 2,500 different mortgages to choose from.

Choice is widest for people with large equity stakes in their homes or big deposits to put down, with 541 different mortgages on offer for people looking to borrow 60% of their home’s value and 520 for those borrowing 75%.

What if I only have a small deposit or equity stake?

Unfortunately, choice for people looking to borrow a high proportion of their home’s value has been more affected.

The number of deals for people with a 5% deposit has dropped from 162 at the beginning of the month to 55 now.

The situation is slightly better for people with 10% to put down, with 127 different loans available, although this is significantly lower than the 326 deals available on 1 April.

Even so, there are still a variety of different deals for borrowers to choose from, while new offers in this space are being launched all the time. For example, HSBC introduced a new tracker deal for people borrowing 90% of their home’s value last week.

In short, if you need to remortgage but have only a small equity stake in your home, you should not be put off from doing so.

What is happening to mortgage rates?

The good news is that mortgage rates are falling in response to cheaper borrowing costs for banks and building societies themselves.

The average cost of a two-year fixed rate mortgage has fallen from 2.36% on 1 April to 2.13% now, while the cost of a five-year fixed rate deal has dropped from 2.66% to 2.37%.

Rates have fallen across the board, not just for borrowers with large equity stakes in their properties.

In fact, one of the biggest reductions is to the cost of an average five-year fixed rate loan for someone with just a 10% deposit, with this dropping by 0.61% since the beginning of the month.

Is it a good time to remortgage?

Although there are fewer mortgages than before the market was impacted by coronavirus, there continues to be a good choice for borrowers.

It is also expensive for homeowners to sit on their lender’s standard variable rate (SVR), the rate people typically revert to when their existing deal comes to an end.

The average interest rate charged on an SVR is currently 4.61%, compared with an average of 2.13% on a two-year fixed rate deal.

As a result, someone with a £200,000 mortgage would save nearly £3,240 a year by switching from their lender’s SVR to a new deal.

What should I do if I need to extend my mortgage offer?

While mortgage offers are normally valid for three months from when they are made to when borrowers draw down the funds, lenders have agreed to extend this period for an additional three months in light of the current property market conditions.

If you need to extend your mortgage offer because your house move has been delayed due to the current lockdown, you should contact your lender and tell them about your situation.

by Blackstones