Extended support for struggling mortgage borrowers confirmed
Mortgage borrowers who are struggling with their payments due to the financial impact of coronavirus will be able to get further support, the City regulator has confirmed.
The Financial Conduct Authority (FCA) confirmed it will press ahead with proposals announced earlier in November.
It means that borrowers can access payment holidays of up to a maximum of six months.
Those who have not yet had any payment holidays will be able to ask for deferrals totalling six months if they need to.
Borrowers who have already taken payment holidays of less than six months will be able to top them up to a maximum of six months in total.
The FCA said mortgage borrowers who have already had a six-month payment holiday will not be eligible for a further payment deferral.
But their lender should still offer them support tailored to their individual needs if they are struggling financially. In some cases, this could include the option to defer further payments.
Borrowers will have until March 31 2021 to apply for an initial or a further payment deferral.
After that date, they will be able to extend existing deferrals to July 31 2021, provided these extensions cover consecutive payments, and subject to the maximum six months allowed.
The new guidance will be fully in force from November 20, but the FCA is encouraging firms that are able to start providing the enhanced support sooner to do so.
The FCA emphasises that people should keep up their mortgage payments if they can afford it. Payment deferrals can mean borrowers end up paying more in the longer term as interest builds up and the sum borrowed will still need to be paid back.
Sheldon Mills, interim executive director of strategy and competition at the FCA, said: “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.”
The FCA will continue to keep the support available to consumers under review.