FCA advises three month extension to mortgage support

FCA advises three month extension to mortgage support

The Financial Conduct Authority (FCA) has confirmed that holiday payments for mortgage customers will be extended until the end of October this year in a bid to combat the financial impacts of the coronavirus crisis. 

The FCA has confirmed that customers still experiencing temporary payment difficulties due to the outbreak of the virus will be able to take a full or part payment holiday for a further three months.

Homeowners yet to apply for a payment holiday have until 31 October 2020 to do so.

The latest figures released by UK Finance show that1.86 million mortgage payment holidays have been issued as of 28 May 2020 - the equivalent to one in six mortgages.

The financial watchdog has also revealed that the current ban on lender repossessions of homes will also be continued to the same date.This will ensure people are able to comply with the government’s policy to self-isolate if they need to.

Despite calls from Nationwide boss Joe Garner for further payment holidays to impact credit scores, the FCA has stated that this will not be the case. 

The FCA said that lenders will continue to support customers who have already had a payment holiday where they need further help. it said that firms should contact their customers to find out what they can re-pay and, for those who remain in temporary financial difficulty, offer further support, which will include the option of a further three-month full or part payment holiday.

Christopher Woolard, interim chief executive at the FCA, said: “The measures we have confirmed today will mean anyone who needs to can get help from their lender, if they are still struggling to pay their mortgage due to coronavirus.

“It is important that if a consumer can afford to re-start mortgage payments, it is in their best interests to do so. Customers should talk to their firm about the best option available for them.”

Stephen Jones, UK Finance CEO, added: “Mortgage lenders are committed to supporting their mortgage customers through these difficult times and the final guidance from the regulator will enable both firms and borrowers to plan ahead. For those customers who are nearing the end of their three-month payment holiday, providers are offering them help and flexibility to choose the next steps which best suit their needs.

“It will always be in the borrower’s best interests to pay their mortgage if they are able as this will reduce the level of their repayments in the long run but for those customers who are struggling, help is available.

“The extension of the payment holiday scheme until 31 October 2020 for customers yet to take to one will provide much-needed breathing space for those who need it, while the continued moratorium on involuntary repossession will ensure no homeowner loses their home because of the impact of Covid-19 on their finances.

“A payment holiday may not be the right choice for everyone, and borrowers should only apply if they need one. Any borrower who is concerned about their financial situation should check with their lender as early as possible, with providers’ website giving the latest information on the support available.”

The FCA’s guidance comes into force on 4 June 2020 and only applies to mortgages. It does not apply to consumer credit products which are covered by separate guidance which will be updated in due course.

  • Read all of our articles relating to COVID-19 here.
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