Mortgage holiday: Payment deferrals extended into 2021 – full details on FCA announcement

We will use your email address only for sending you newsletters. Please see our Privacy Notice for details of your data protection rights.

Mortgage holiday rules have allowed people to effectively pause their repayments if they were financially impacted by coronavirus. The government and financial regulator have extended this support a number of times and today, the FCA detailed this support will be continued into 2021.

While reiterating customer should keep up with their mortgage payments if they’re able to do so, the FCA confirmed the following:

  • Those who have not yet had a payment deferral will be eligible for payment deferrals of six months in total.
  • Those who currently have a payment deferral will be eligible to top up to six months in total.
  • Those who have previously had payment deferrals of less than six months will be able to top up, as long as total deferrals don’t exceed six months. This includes those receiving tailored support and those who are behind on payments.
  • Borrowers who have already had six months of payment deferrals will not be eligible for a further payment deferral. Firms will provide tailored support appropriate to their circumstances. This may include the option to defer further payments.

Sheldon Mills, the interim Executive Director of Strategy and Competition at the FCA, commented on the new announcement: “Today we have confirmed further support for borrowers struggling financially as a result of coronavirus.

“The announcement we have made today, ensures that the support offered through payment deferrals is as flexible and accessible as possible.

“This means borrowers will again be able to access payment deferrals up to a maximum of six months.

“However, if you are able to keep paying it will be in your best long-term interest to do so. Payment deferrals should only be taken when absolutely necessary.”

DON’T MISS:
Payment holiday warning: Credit scores to ‘fall off a cliff’ [WARNING]
Martin Lewis: Mortgage holder’s urged to wait as help is on its way [EXPERT]
Payment holiday: Consumers ‘struggling’ to get through to lender [INSIGHT]

Additionally, the FCA confirmed no one should have their home repossessed without their agreement until after January 31 2021.

Affected consumers will have until March 31 2021 to apply for an initial or a further payment deferral.

Beyond that date, they will be able to extend existing deferrals to July 31 2021, provided these extensions cover consecutive payments, and are subject to the maximum six months allowed.

Payment deferrals under the new proposals will not be reported as a missed payment on a credit file but the FCA warn that this does not mean that consumers’ ability to access credit will be unaffected in future.

This new guidance will be fully in force from November 20 but the FCA encouraged firms to start staking action sooner where they can.

The extension caught the eye of Peter Tutton, the Head of Policy at StepChange.

Peter welcomed the extension but also urged affected consumers to embrace a certain amount of caution: “The extension of payment deferrals for mortgage borrowers will come as a welcome relief to those who have yet to take full advantage of the scheme and are in difficulty due to ongoing coronavirus restrictions.

“We strongly echo the FCA’s recommendation that consumers should keep up with payments on their mortgage if they can afford to do so and should only seek support where such support is absolutely necessary.

“Our main concerns are for those whose payment deferrals have come to an end and are unable to resume repayments, as their only option will be whatever their lender offers.

“Some people may feel under pressure to resume payments due to concerns about negative credit reporting and use credit to do so, which could lead to more serious problems later down the line.

“Aside from more consistent forbearance from different lenders, there is a need for Government to consider how the underlying mortgage safety net can be strengthened, given the long tail of payment problems likely to arise from unemployment.”

On this, the FCA concluded their announcement by detailing they will continue to keep the support available to consumers under review.

Source: Read Full Article