It goes without saying that Covid-19 has had a huge impact on all of our lives. Many have lost their jobs. More have been placed on furlough. Both of which have had a severe reduction on the money that comes into households.
Both of these things, along with having to entertain our children at home and a need to buy more food, or pay out for more utilities; has had a huge financial impact.
So much so, that many lenders have reported that their borrowers have asked for borrowing breaks. In fact, it is thought that during the past few months, hundreds of thousands of borrowers have asked for a break in payments on their credit cards and their mortgages.
It seems that many of the applications for a payment break were made in April. There was an initial surge of applications as the measures were introduced. After this, more households were realising that they may not need the help after all, which slowed down applications.
Whilst the uptake on the idea of payment breaks was high (some lenders even reporting that the total payment breaks taken by their customers were as high as £37.1 billion) it doesn’t look like things are set to continue this way.
With our lives returning to a “new normal”, many borrowers have turned down the option to extend their payment breaks for a further 3 months.
It isn’t all bad news
Whilst we have seen some of the negatives on the economy caused by Covid-19. It goes without saying that it hasn’t all been bad news. The Bank of England has reported that households around the UK have seen a reduction in their debt.
This is largely down to the fact that many have spent more time at home. Families have been unable to go out and do many of the things that they want. In turn, they have become accidental savers. This means that they have been forced into saving their money. Something that they may not have already done, which in turn has meant that they then can pay off more money on their debt.
We are yet to see how things are going to be in a Covid-19 future. As well as how this lock-down and the restrictions introduced will have a long-term impact. Both on our economy and the financial situation of each and every household in the UK.