UK lenders to give homebuyers three-month mortgage extension option

British lenders agreed on Thursday to give all homebuyers the option of extending mortgage offers by three months after the coronavirus outbreak brought the housing market to a near standstill. UK Finance, the banking industry body, said banks would grant homebuyers who have exchanged contracts the possibility of moving at a later date by extending their mortgage offer for up to three months.

"Lenders recognize that many people looking to move into their new home are facing significant stress and uncertainty due to the impacts of coronavirus," said UK Finance boss Stephen Jones. "Current social distancing measures mean many house moves will need to be delayed." Banks were also urged to help customers "manage their finances as a matter of urgency" as homebuyers may go through financial hardship during the three-month extension because of the spread of the virus.

"It is possible that some borrowers' financial circumstances may change during the three months. If this happens, or the terms of the purchase change, we will work closely with the borrower to achieve a sensible outcome," said Robin Fieth, Chief Executive of the Building Societies Association (BSA). While deterring new buyers, the pandemic is making completing transactions increasingly difficult as it is almost impossible for banks to carry out surveys and get other paperwork done during a nationwide lockdown ordered by Prime Minister Boris Johnson on Monday.

Earlier on Thursday, the Financial Times reported that banks were calling on the government to suspend the housing market altogether. But one source with direct knowledge of the discussions said talks between ministers and lenders had mainly focused on offering extensions and flexibility if people could not immediately complete their house purchase.

"We want the housing market to remain open and people to be transacting," this source said, adding the priority was to support homebuyers challenged by coronavirus disruption. 

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