FCA announces plans to continue mortgage holidays for homeowners affected by coronavirus

Proposals also include extending the application window to the end of October and continuing the ban on mortgage possession proceedings

The Financial Conduct Authority (FCA) has announced plans for continuing mortgage holidays for homeowners who are struggling to meet their payments due to coronavirus (COVID-19).

The proposals, that are subject to a short consultation period until 26 May 2020, outline the options that firms will be required to provide to customers who are coming to an end of a payment holiday under arrangements first announced by the Chancellor on 18 March 2020, as well as those who are yet to request one.

NB - HM Treasury has confirmed today that, since the option to request a payment holiday of up to three months was introduced, more than 1.8 million have been taken up.

New measures set out by the FCA in draft guidance to firms and consumers include that -

• firms should contact customers at the end of a payment holiday to find out if they can resume payments and, if so, agree a plan on how the missed payments will be repaid;
• lenders should continue to support customers who have already had a payment holiday where they need further help, including by agreeing a further three-month deferral;
• mortgagees who have not yet had a payment holiday and are experiencing financial difficulty can request one up to 31 October 2020;
• the current ban on repossessions of mortgaged homes will be continued to 31 October 2020;
• payment holidays and partial payment holidays offered under the FCA guidance should not have a negative impact on credit files.

Responding to the proposals, chief executive of the Money Advice Trust, Joanna Elson, said -

‘Today’s announcement that lenders should continue to support mortgage holders, including offering a further three-month payment holiday where needed, is welcome, and will give further reassurance to homeowners whose finances have been impacted by Covid-19.  It is essential that relief measures are withdrawn in a slow, cautious and co-ordinated way, and today’s news - along with the recent extension of the Job Retention Scheme - are encouraging signs that this is the approach the government intends to take.’

However, Ms Elson also said that, with people in private rented accommodation among the most exposed to financial difficulty in the wake of the outbreak, the extra help for people with mortgages must be followed by action to support private renters, including increasing the local housing allowance rate, increased funding for discretionary housing payments, and an extension to eviction protections in England and Wales beyond the end of June.

For more information see FCA announces support for customers who are struggling to pay their mortgage due to coronavirus from fca.org.uk