Mortgage and credit support extended amid second lockdown

Mortgage and credit support extended amid second lockdown
 Credit: Joe Giddens/PA Wire

Mortgage payment holidays are being extended for up to six months after the prime minister’s weekend announcement on new national coronavirus restrictions in England.

Banks and building societies have agreed with regulators and the Treasury to extend the provision of mortgage payment holidays of up to six months beyond their initial October 31 deadline.

Under new guidance borrowers financially affected by the coronavirus, and who have not yet had a mortgage payment holiday, will be entitled to a six-month deferral, while those that have already started a mortgage payment holiday will be able to top up to six months without this being recorded on their credit file.

The FCA said borrowers should only take up the support if they need it, and that it was important for mortgage borrowers to continue to make repayments if they can afford to do so.

The regulator also said that borrowers who have already had a six-month payment deferral, and are still experiencing payment difficulties, should speak to their lender to agree tailored support.

Eric Leenders, managing director of personal finance at UK Finance, said: “Lenders are providing unprecedented levels of support to help customers through the Covid-19 crisis and stand ready to deliver ongoing assistance to those in need.”

Robin Fieth, chief executive of the Building Societies Association, added: “Building societies and credit unions recognise the financial pressures on some households and will continue to work hard to support customers in the coming months, working closely with the FCA.”

Mortgage payment holidays were introduced in March, and extended in June, as a way to support borrowers who were experiencing difficulties with making payments due to coronavirus restrictions.

According to UK Finance, an estimated 162,000 mortgage customers were still on a payment deferral as of October 9, down from a peak of 1.8m in June.

Consumer credit borrowers

In light of the latest lockdown announcement the FCA also extended its temporary rules for customers of credit products struggling amid the pandemic. 

Proposals published during the first coronavirus wave required banks to offer a temporary payment freeze on loans and credit cards up to the end of October. 

But in an announcement this morning (November 2) the regulator proposed credit customers who had not yet had a payment deferral under its previous guidance could now request one.

The deferral can last for up to six months and borrowers who are currently benefitting from a first payment deferral can also apply for a second. 

For high-cost short-term credit, such as payday loans, the FCA said consumers could apply for a payment deferral of one month if they had not already had one.

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