Eight in 10 customers have now returned to making full mortgage repayments, according to UK Finance.
Figures published by the industry body showed there were 130,000 mortgage payment deferrals in place at the end of December.
UK Finance said this equated to one in 84 mortgages in the UK being subject to a payment deferral at the end of last year, compared to one in six in June when deferrals peaked at 1.8m.
It added that the number of mortgage deferrals in place has been broadly stable since late October, as customers returned to making payments or sought tailored support from their lender.
Eric Leenders, managing director of personal finance at UK Finance, said: “Millions of people whose finances have been impacted by the pandemic have already received support from their lender through a mortgage payment deferral.
“With new lockdown restrictions in place, the banking and finance industry is continuing to help customers through these challenging times, including by providing tailored support appropriate to their needs.
“It will always be in the long-term interest of borrowers to resume making payments if they are able to do so. However, for anyone who is still struggling ongoing support will be available, and so we would urge customers to contact their lender to discuss their options before missing a payment.”
Ellen Roome, chief executive and financial adviser at The Finance Roome, said: “In the scheme of things a small payment holiday has probably helped far more than hindering people in the long term.”
Ms Roome added: “Perhaps as things ease for people, and if they have the ability to overpay on their mortgage without penalty, they could start to chip away at the delayed payments in order to reduce the increased debt.”
The Financial Conduct Authority (FCA) extended the payment deferral scheme last November until the end of July after the prime minister announced the second national lockdown for England.
Customers have until March 31 to apply for, or extend, a mortgage payment deferral.
But UK Finance said customers who require support, but had not yet taken a payment deferral, were encouraged to apply “well before” their February mortgage payment is due if they wanted to benefit from the full deferral period of up to six months.
The industry body also reminded customers to contact their lender before missing a payment that could appear in their credit file and potentially impact their ability to borrow or remortgage in the future.
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