A further quarter of households on a payment holiday have seen their disposable income increase, choosing to take the payment holiday to build up a reserve fund in case their future earnings decline.

Currently, around 1.9 million mortgage accounts are in the payment deferment scheme. The average balance of a borrower who has taken a payment holiday is £150,000, 30% higher than the £114,000 average balance of a borrower who has not used the scheme.

Mortgage applications increased year-on-year by 13% in July, followed by rises of 25% in both August and September and the market is on track to lend £216bn this year, according to the analysis from Experian.

Due to the lockdown restrictions, lending is expected to be down on last year’s total of £250bn.

Lisa Fretwell, managing director of data services at Experian, said: “People moving home is good news for the economy, as activity in the property market fuels growth in related services.

“Most moves require a mortgage and, while lenders want to extend new loans, they have a responsibility to ensure homebuyers are only taking on what they can afford in the long-term.

“Covid-19 has complicated the financial situation for millions of people, and the challenge for lenders to understand each applicant’s circumstances has become more difficult as a result.”