FCA extends mortgage holiday deadline

The Financial Conduct Authority (FCA) has extended the mortgage payment holiday application deadline for customers struggling to meet payments. Mortgage customers now have until the end of October to request a break from payments while repossessions are further blocked.

The FCA has confirmed the support firms should give to mortgage customers who are either coming to the end of a payment holiday or who are yet to request one. The FCA is also reminding customers that if they can afford to resume payments, they should.

For customers still experiencing temporary payment difficulties due to coronavirus (Covid-19), firms will offer support, with options including a full or part payment holiday for a further three months. Customers yet to apply for a payment holiday have until 31st October 2020 to do so.

The FCA has also confirmed:

• The current ban on lender repossessions of homes will be continued to 31 October 2020. This will ensure people are able to comply with the government’s policy to self-isolate if they need to.
• Firms will communicate with customers regarding what happens when their payment holiday ends. They should offer a range of options for how the missed payments will be repaid, if they are able to resume payments.
• Lenders will continue to support customers who have already had a payment holiday where they need further help. 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.
• Payment holidays offered under this guidance will not have a negative impact on credit files. However, consumers should remember that lenders may use information obtained from other sources, such as bank account information, in their lending decisions.
• Depending on the customer’s circumstances, firms may make them aware of self-help steps a customer may take or signpost customers towards sources of debt advice. This will be for anyone concerned about managing their money during coronavirus and wants to find out what steps to take to get back on track.
• When implementing this guidance, firms should be particularly aware of the needs of their vulnerable customers and consider how they engage with them. For customers who aren’t able to use online services (such as digital channels), firms should make it easy for customers to access alternatives.

This guidance comes into force on 4th 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.

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.”

Responding to the FCA’s updated guidance for mortgage customers affected by coronavirus, Stephen Jones, UK Finance CEO, said “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.”

Andrew Johnson, Money Expert at the Money and Pensions Service said “It is positive that flexibility will continue to be available to people facing temporary money issues but it’s really important anyone taking a break from paying their mortgage understands the implications.”

James Jones, Head of Consumer Affairs at Experian, said “The official extension of the mortgage payment holiday scheme will provide a welcome relief to many homeowners. We know the financial impact of the Coronavirus pandemic is a daily worry for many of us – particularly where regular income has been affected – and this will give people who are finding it difficult to make payments some very welcome certainty and comfort.”

“If you think you may struggle to meet your regular payments because of the impact of the pandemic, it is vital that you speak to your lenders and other providers as soon as possible. They will discuss what help they can provide that best suits your circumstances, which might be a payment holiday, reducing or waiving interest. Importantly, you must confirm an agreement with your lender before stopping any payments, for example by cancelling Direct Debits. Unless you have an agreement in place, unauthorised missed payments can lead to penalties and are likely to impact your chances of getting credit in the future.”

“If you agree a payment holiday with your lender, it’s important to remember that any unpaid interest will probably still need to be paid back to your lender – but you won’t have to worry about any additional fees or charges.”

“We are committed to helping people safeguard their finances and credit scores at this challenging time. In response to these extraordinary circumstances, a new agreement by Experian, the other credit reference agencies and lenders is helping make sure people’s credit scores are protected where payment holidays are agreed”.