Sharon McDougall - 27th May 2020 - 2 minutes to read
A scheme that has seen hundreds of thousands of UK consumers granted mortgage payment holidays has been extended for a further three months.
It has also been announced that a ban on home repossessions will remain in place until the end of October.
Roughly 1.8 million borrowers took advantage of the mortgage holiday scheme after it was initially introduced in March as a response to the impact of the COVID-19 crisis.
The initiative, which is decided upon by government and overseen by the Financial Conduct Authority (FCA), was initially introduced for a period of three months but it is clear that the coronavirus situation is far from over and huge numbers of people are still being impacted by it financially.
In its communications with lenders, the FCA has made clear that they should continue to grant mortgage holidays to anyone who needs them whether they have applied for one previously or not.
“Our expectations are clear – anyone who continues to need help should get help from their lender,” said Christopher Woolard, interim chief executive at the FCA.
“We expect firms to work with customers on the best options available for them, paying particular attention to the needs of their vulnerable customers, and to provide information on where to access help and advice.”
John Glen from the government’s Treasury team has said the extension of the mortgage holiday scheme is designed to provide support to the very many people whose incomes have been hit by coronavirus.
“We’re doing everything we can to help people with their finances at this difficult time and that includes making sure people get the support they need with their mortgages,” he said.
“Everyone’s circumstances will be different, so when homeowners can pay some or all of their mortgage, they should work with their lender on a plan,” Mr Glen said. “But if they are still struggling, I want them to know that help is there.”
Mortgage holidays allow borrowers to skip repayments they would otherwise have been obliged to make but lenders continue to charge interest on their loans while payments are not being made.
However, those interest payments are not demanded immediately and are effectively added to the total costs of a given mortgage deal.
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