Almost two million homeowners have told their mortgage lender that they are unable to meet their monthly repayments.
Figures published by UK Finance, the banking lobby group, showed that 1.9 million mortgage payment holidays have been taken by borrowers in the last three months.
This is equivalent to one in every six mortgages in Britain, with an average of £755 being deferred each month. This is up from 1.8 million last month.
Since March, banks have been required to offer payment breaks to customers who are struggling financially because of coronavirus. This includes borrowers who have contracted the virus and those who have seen their income fall because of its economic impact.
The Government programme has since been extended, meaning customers can request payment holidays until October 31. However, there have been warnings that consumers have not understood the repercussions of payments breaks.
Many borrowers are now coming to the end of their initial three-month payment holiday, and banks are trying to encourage customers to resume repayments.
UK Finance said mortgage companies would contact customers to discuss their options. This could include customers paying off only the interest accrued each month, or resuming payments but at a lower level than previously.
Borrowers in the most financial trouble can extend their payment holiday by a further three months.
However, as interest continues to accrue when the borrower takes a payment holiday, they will pay back much more in the long run. A customer taking a six month break could add as much £4,000 to their overall mortgage costs.
There could be other repercussions. A Telegraph Money report warned that borrowers who have asked for a payment holiday may be denied loans or face higher interest rates in the future.
Eric Leenders, of UK Finance, said: “Lenders understand that many households will continue to see their finances squeezed as the pandemic continues, and we are working hard to ensure everyone gets the support suited to their needs.
“The industry has a clear plan to help homeowners get through these tough times, and whilst it is best for customers to restart their payments if they can, where this is not possible lenders are keen to help, whatever a customer’s financial situation.”
In addition to mortgage holidays, UK Finance said that banks have offered 962,000 credit card payment deferrals and 689,000 breaks to personal loan customers during the pandemic.