BORROWERS who took advantage of the three-month mortgage payment holiday offered by banks and building societies earlier in the coronavirus pandemic could extend it for a further three months or start making reduced payments under proposals by the City regulator.
The Financial Conduct Authority (FCA) has outlined the options firms will have to offer to customers nearing the end of a payment holiday and those who have yet to ask for them.
For borrowers who have not yet requested one, the deadline for application would be extended to October 31.
For people still experiencing financial difficulties as a result of Covid-19, the FCA said lenders should continue to offer support, which could include extending a payment holiday by a further three months or making reduced payments.
It said the current ban on repossession of homes should also be continued until October 31.
The FCA is seeking feedback on its proposals by May 26.
Christopher Woolard, the regulator’s interim chief executive, 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 restart 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 October 31.”
Laura Suter, personal finance analyst at investment platform AJ Bell, welcomed the move, but warned: “Based on the average mortgage in the country, UK banks were already set to make more than £800 million more in additional interest by people taking a mortgage holiday and that will leap up now the period has been extended.
“While the break in payments will be a lifeline for some people, they should research all the options first.”
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