Mortgage customers have been given additional breathing space by the Financial Conduct Authority (FCA) after it told lenders to offer them an extended payment holiday to help them through the coronavirus pandemic.
The regulator said that borrowers should be able to extend their mortgage payment holiday by three months or start making reduced payments.
The FCA’s plans outline how lenders should treat customers coming to the end of a payment holiday, as well as those who are yet to request one.
For customers yet to request a payment holiday, the time to apply for one would be extended until 31 October 2020.
For those who have already had a three-month payment break but are still having money problems, the present holiday could be extended by a further three months.
The move comes after Chancellor Rishi Sunak announced on 17 March that mortgage lenders would provide customers with three months of payment holidays in an effort to support financial security amid the coronavirus pandemic.
Christopher Woolard, interim chief executive at the FCA, said: “Our expectations are clear – anyone who continues to need help should get help from their lender. 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.
“Where consumers can afford to re-start mortgage payments, it is in their best interests to do so. But where they can’t, a range of further support will be available. People who are struggling and have not had a payment holiday, will continue to be able to apply until 31 October.”
Keith Richards, Chief Executive of the Personal Finance Society, welcomed the extended and “pragmatic” approach for those who need financial support during these “challenging and uncertain times”.
He said: “When the mortgage payment holiday was first announced many consumers took this route because they thought they would be silly not too in case their role was furloughed or their other sources of income were threatened by the economic fallout of measures to slow the spread of coronavirus and it is right that the FCA is encouraging consumers to resume payments if able to, rather than continue to extend the term of their mortgage.
Richards said that it is “vital” that consumers speak to their mortgage broker or financial adviser about the most suitable options for their financial circumstances.
He said: “For mortgagees who are genuinely struggling or worried financially the FCA’s announcement will reassure them that help is still available for those worried about keeping a roof over their head if their income is affected by Covid-19.”