Santander reveals 240,000 of its customers are on mortgage and credit card holidays – with savings rates and 123 account due to be cut
- 206,000 mortgage borrowers had been given holidays
- Meanwhile 15,000 credit card and 18,600 loan borrowers had paused payments
- The £32.4bn of mortgages having payments paused was 19% of its lending
- The bank said it expected its income to be lowered due to the historically low Bank of England base rate and Britain’s continue lockdown
Nearly 240,000 Santander customers have been given three-month payment holidays on their credit cards, loans and mortgages, the bank said this morning.
The UK arm of the Spanish bank, Britain’s fifth-largest high street lender, revealed its pre-tax profit fell 58 per cent to £114million in the first three months of 2020, blaming competition in the mortgage market and the coronavirus crisis.
Santander currently has seven cuts to variable rate savings accounts lined up for next month, while the in-credit interest paid on its flagship 123 current account will also be cut from 1.5 per cent to 1 per cent.
Santander said 240,000 mortgage and unsecured borrowers had been granted payment holidays as of last Friday
The bank said it had set aside £122million to cover loan defaults and losses related to the coronavirus, which took its credit impairment losses for the first three months of 2020 to £165million, eating into its profits.
Fellow high street bank HSBC announced this morning its profits for the first three months of 2020 were half what they were last year, as it set aside an enormous £2.4billion to cover coronavirus-related defaults and losses.
Santander said it expected its income to be further impacted by the record low Bank of England base rate of 0.1 per cent and ‘significantly reduced new business related to the lockdown’.
It said this would be ‘partially offset by changes to deposit pricing’, with the savings cuts coming into effect in the second half of this year.
The savings accounts facing the chop currently pay between 0.2 per cent and 3.25 per cent. Following rate cuts, they will pay as little as 0.01 per cent, and its Junior Isa will be slashed from 3.25 per cent to 2 per cent.
Meanwhile, Santander’s fixed-rate bonds pay as little as 0.25 per cent.
Santander said that 239,600 mortgage and unsecured borrowers had been granted payment holidays as of last Friday, with payments towards a fifth of its mortgage lending put on hold for three months.
The news that it had granted 206,000 mortgage holidays came on the same day that trade body UK Finance revealed 1.6million total requests from homeowners had been granted, with 1.2million of those being approved in the first three weeks of the scheme.
Meanwhile Santander, which offers personal loans at as low as 3 per cent and some of the best interest-free credit card offers on the market, said 18,600 personal loan borrowers and 15,000 credit card borrowers had asked for payment holidays on nearly £200million of unsecured debt.
The 33,600 requests for payment holidays came in just over two weeks, after new FCA rules requiring banks to offer customers bigger fee-free overdrafts and the ability to pause credit card and loan payments for three months came into force on 9 April.
However, while they do not have to pay anything for that time, borrowers do still incur interest and could end up having to pay off more.