Hundreds of thousands of customers of Barclays and Santander have taken payment holidays on credit cards, personal loans and mortgages, the banks revealed in results today.
At the same time, official figures from the Bank of England show households have cleared billions of pounds of debt over the last few months.
Britain’s third-largest mortgage lender Santander revealed in its half year results that more than a fifth of mortgage borrowers, 239,000 in all, had asked for three-month breaks on home loans worth a collective £37.1billion.
However, the number of customers still on payment holidays had fallen to 7 per cent by 15 July, the bank said, as thousands didn’t take up the option of a further three-month break and instead began making repayments again.
On holiday: 1.05m credit card payment holidays had been taken as of 9 July, trade body UK Finance said. Barclays and Santander revealed Wednesday they had handed out 183,000
The vast majority – 206,000 – of those mortgage holidays had been taken by 24 April, suggesting an initial surge in applications for payment breaks after regulators introduced them in March with few homeowners seeing their circumstances change between April and June to the extent that they needed to take one.
The UK arm of the Spanish bank, which saw profits fall close to 75 per cent on the same six-month period last year as it braced itself for hundreds of millions of pounds in bad loans, also revealed one in 10 personal loan borrowers and 26,000 credit card customers had taken payment holidays as of the end of June.
Meanwhile, Barclays said it had handed out payment holidays on 157,000 credit cards, 106,000 loans and 121,000 mortgages, on borrowing worth a collective £16.2billion.
The figures in its results mean Barclays alone has handed out nearly 15 per cent of the 1.05million credit card payment holidays granted by banks by 9 July and 15 per cent of the 707,000 payment holidays granted on unsecured loans.
How many customers have taken payment holidays?
– 157,000 credit card holidays worth £0.7bn – 5% of book
– 106,000 loan holidays worth £0.6bn – 11% of book
– 121,000 mortgage holidays worth £14.9bn – 10% of book
– 26,000 credit card holidays worth £0.1bn – 4% of book
– 28,000 loan holidays worth £0.2bn – 10% of book
– 239,000 mortgage holidays worth £37.1bn – 22% of book
Britain’s biggest bank Lloyds unveils its six-month results tomorrow.
In total, 1.9million mortgage payment holidays have been handed out, according to trade body UK Finance, but it was unable to confirm how many of those customers had begun resuming repayments.
The results from the two major high street banks came as the Bank of England found the amount consumers owed on credit cards and loans had fallen by a record amount over the last 12 months, thanks to an enormous slump in borrowing and spending since March.
Four months of low borrowing means the amount households owe on credit cards and loans fell from £225.3billion in February to £207.1billion last month.
This is a 3.6 per cent drop on the amount outstanding in June 2019, the largest year-on-year fall since records began in 1994.
While the net amount repaid fell from £4.6billion in May to £86million last month as consumer borrowing ‘recovered a little’, it remained ‘significantly below pre-coronavirus levels’, the Bank of England said.
In the 18 months to February 2020, an average £1.1billion more was borrowed each month.
|Month||Amount owed on credit cards||Monthly change||Monthly percentage change||Annual percentage change|
|Source: Bank of England (seasonally adjusted data)|
Alistair McQueen, head of savings and retirement at the insurer Aviva, said: ‘Today’s latest data shows the UK’s rapid shift towards becoming a nation of savers is continuing.
‘The Bank of England data shows that households have repaid five years of credit card debt in just five months.
‘Outstanding credit card debt now stands at £61.6billion, down from a high of £72.9billion in 2019, and taking us back to a level not seen since 2015’.
Some £248million more credit card debt was paid back than was borrowed in June, the Bank of England found.
A v-shaped recovery? Consumer borrowing remained below pre-coronavirus levels in June but households paid back £86m more than they borrowed, compared to £7.4bn in April
But although households repaid an average £18.5billion in consumer debt between April and June, this was lower than the £24.6billion seen in February.
This suggests that Britain’s lower debt pile has been driven by the shuttering of large parts of the economy and the inability of consumers to spend, rather than households making a concerted effort to get their finances back in the black.
The Bank of England data shows that households have repaid five years of credit card debt in just five months
Alistair McQueen, Aviva
Barclays and Santander’s results also revealed just how much customers had stashed away in savings over the first six months this year, with Barclays customers saving £20.2billion, increasing the bank’s UK deposits by 10 per cent.
Santander meanwhile saw its deposits increase by £7.9billion in the first six months of this year, further revealing how the lockdown had led to a nation of ‘accidental savers’.
However, those billions of pounds of savings are unlikely to be earning very much interest, with Barclays becoming the last major high street name to pay just £1 interest on every £10,000 saved.
Savers after a better deal should switch, and can find the best rates in This is Money’s best buy tables.
THIS IS MONEY’S FIVE OF THE BEST CREDIT CARDS
Some links in this article may be affiliate links. If you click on them we may earn a small commission. That helps us fund This Is Money, and keep it free to use. We do not write articles to promote products. We do not allow any commercial relationship to affect our editorial independence.