22 May 2020
Homeowners struggling financially due to coronavirus will be able to extend their mortgage payment holiday for a further three months, or cut payments.
The availability of a three month mortgage holiday was first announced in March and since then over 1.8 million people have taken advantage.
That respite from payments would end for the first applicants in June and the Treasury said the extension would provide certainty for those affected.
Homeowners will by contacted by their lender to discuss a way forward. Where consumers can afford to re-start mortgage payments, it is in their best interest to do so. However, if people are still struggling and need help, a full extension of the mortgage holiday for a further three months will be available as one of the options open to them.
The Financial Conduct Authority (FCA) has published new draft guidance today for lenders which will set out the expectations for firms and the options available to their customers.
The date for homeowners to apply to extend their mortgage holidays has also been extended, with customers able to apply until the end of October, so if someone applied for one then, it would take them through to January.
Christopher Woolard, Interim Chief Executive at the FCA, said: "Our expectations are clear – anyone who continues to need help should get help from their lender. We expect firms to work with customers on the best options available for them, paying particular attention to the needs of their vulnerable customers, and to provide information on where to access help and advice.
"Where consumers can afford to re-start mortgage payments, it is in their best interests to do so. But where they can’t, a range of further support will be available. People who are struggling and have not had a payment holiday, will continue to be able to apply until 31 October."
The FCA has also confirmed the current ban on repossessions of homes will be continued to 31 October 2020 in an effort to ensure people are able to comply with the government’s policy to self-isolate if they need to.
Payment holidays and partial payment holidays offered under this guidance should not have a negative impact on credit files. However, consumers are being urged to remember that credit files aren’t the only source of information which lenders can use to assess creditworthiness.