Sharon McDougall - 3rd June 2020 - 2 minutes to read
Banks and other lenders have been told to continue offering full or partial payment holidays to mortgage borrowers who have been hit by the coronavirus crisis.
The Financial Conduct Authority (FCA), which fundamentally decides what happens across the UK’s financial services sectors, has said mortgage holidays should continue being offered until the end of October.
Those offers will now be available to people who have already requested mortgage holidays and to those who decide they need to do so any time up to October 31st.
“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,” said the FCA’s interim chief executive Christopher Woolard.
However, the FCA have been keen to stress to borrowers that they should only make use of mortgage holidays if they really need to and they should make their normal repayments if they possibly can.
“It is important that if a consumer can afford to re-start mortgage payments, it is in their best interests to do so,” Mr Woolard said.
Lenders have been told that they cannot carry out any home repossessions until at least the end of October, partly so that people can self-isolate if they need to in the context of the coronavirus outbreak and the public health crisis associated with it.
The FCA says that payment holidays taken in the current situation will not have any negative impact on a borrower’s credit rating.
However, as the Citizens Advice Scotland (CAS) charity has pointed out, anyone taking mortgage holidays will ultimately be charged more by their lenders because they will still need to pay interest on their loans while their ‘holiday’ is taken.
“This updated guidance from the FCA is welcome news in the short term for people who are struggling to make mortgage payments as a result of coronavirus,” said Myles Fitt, a financial health spokesperson with the CAS.
“But it’s important to remember that interest on mortgages is still building up when you take a payment holiday and the missed payments have to be paid back.”
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