Mortgage Holidays Extended By Three Months
Homeowners struggling financially at the current time are able to extend their mortgage holiday by an additional three months from today.
It is estimated that 1.8 million homeowners are already utilising the mortgage holiday to ensure they do not fall into arrears or default on their mortgage during the Covid-19 crisis.
New homeowners who have experienced a change in circumstances are also able to start a mortgage holiday if they will struggle in the months ahead.
Lenders are encouraging mortgage holders to make their repayments if they are able to, but will offer a further three month deferment effective when the current period ends in June.
It is thought lenders are also offering alternative temporary measures such as interest only repayments which would reduce the total amount owing.
Richard Pike, Phoebus Software sales and marketing director, commented:
“The payment holiday programme has been hugely successful in providing some respite to borrowers that are currently experiencing financial uncertainty.
“The extension will be welcomed by borrowers, but the industry will need to manage another wave of borrower communication at a time when many lenders will have been working on recalculating borrower accounts. Whilst also communicating new repayments from the initial 3-month holiday period.
“A reduction in receivables for any lender is always an issue, but en-mass for a sustained period, could be a challenge for some, particularly those with securitised assets. Whatever the Government’s intentions, it could be that lenders will take a more detailed look at some borrowers applying for this new initiative. They will need to ensure that only borrowers that genuinely require them are accepted for the scheme, or that other risks such as LTV are considered more closely”.
The Economic Secretary to the Treasury, John Glen said:
“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. That’s why we’re working with the banks and lenders to extend payment holidays if people need them.
“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; but if they are still struggling, I want them to know that help is there.”
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 mortgage payment holiday, will also continue to be able to apply until 31 October.”