According to UK Finance, one in six mortgages are now covered by a payment holiday, with more than 1.82 million mortgage borrowers having been granted a payment holiday by lenders.
Lenders welcomed the Financial Conduct Authority draft guidance consultation and the Bank 0f England Prudential Regulation Authority related publication, on the next steps for those borrowers already on payment holidays who may require continued support due to the ongoing impact of coronavirus on their financial circumstances.
As the FCA acknowledges, it is important that customers receive the support that is right for them.
For customers that have already taken a payment holiday on their mortgage, it may be appropriate in some circumstances for this to be extended.
The range of support available to customers unable to meet their normal repayments include reduced payments, a move to interest only payments for a period, extending the term of the mortgage to reduce payments, taking a payment holiday if the customer has not already done so or a further extension of the payment holiday, depending on the borrower’s circumstances.
Where possible, borrowers will be able to explore their options online.
In addition, an extension of the moratorium on involuntary repossessions until 31 October 2020 on residential and buy-to-let possession action will provide people with reassurance that they will not have their homes repossessed at this difficult time.
Borrowers who are concerned about their ability to make payments should get in touch with their lenders to consider the full set of options available to them.
Stephen Jones, UK Finance CEO, said:
“Mortgage lenders are committed to providing those borrowers nearing the end of their three-month payment holiday with help and flexibility in choosing the next steps which best suit their needs.
“The industry looks forward to regulatory guidance being finalised swiftly to ensure both borrowers and lenders can plan over the coming weeks.
“Meanwhile those borrowers who have already taken a mortgage payment holiday and can afford to make payments are encouraged to do so, as this will reduce the level of their repayments in the long run.
“For those borrowers who have not already applied for a mortgage payment holiday, the industry supports the extension of the availability of payment holidays until 31 October 2020 as this will provide much-needed breathing space for borrowers who need it.
“Lenders are also committed to the moratorium on involuntary repossessions to ensure no homeowner loses the roof over their head because of COVID-19 related repayment difficulties.
“A payment holiday may not be the right choice for everyone, and borrowers should only apply if they need one.
“We would encourage any borrowers concerned about their financial situation to check with their lender, starting by looking at their website which will have the latest information on the support available.”