Mort­gage hol­i­days to end on same day as fur­lough draws to a close

The Daily Telegraph - Business - - Front Page - By Lucy Bur­ton, Rus­sell Lynch and Michael O’Dwyer

MIL­LIONS of fam­i­lies could face a bru­tal au­tumn af­ter the City watch­dog an­nounced an end to mort­gage hol­i­days at the same time as the tax­payer­funded fur­lough scheme is axed.

Covid-hit work­ers will no longer be able to de­mand a break from mort­gage pay­ments be­yond Oct 31, fol­low­ing a change to rules set out by the Fi­nan­cial Con­duct Au­thor­ity.

The fur­lough pro­gramme, which pays up to 80pc of wages for work­ers un­able to do their jobs, will end on the same day – po­ten­tially trig­ger­ing mass re­dun­dan­cies as firms sack staff who they can no longer af­ford. It means Nov 1 could be the day when the true ex­tent of the eco­nomic havoc wreaked by Covid-19 is fi­nally re­vealed.

Fears of a fresh blow are likely to be height­ened af­ter a sur­vey by the Con­fed­er­a­tion of Bri­tish In­dus­try re­vealed sav­age job cuts are ex­pected in Bri­tain’s dom­i­nant ser­vices sec­tor.

Con­sumer-fac­ing com­pa­nies have al­ready slashed jobs at the fastest pace in the sur­vey’s 22-year his­tory, as man­agers take dras­tic ac­tion. Busi­ness and pro­fes­sional ser­vices com­pa­nies are also shed­ding jobs at the quick­est pace since the fi­nan­cial cri­sis in 2009.

Ben Jones, the CBI’s prin­ci­pal economist, said: “As we head into the au­tumn, the UK needs a bold plan to pro­tect jobs as the job re­ten­tion scheme draws to an end, to sup­port the ser­vices sec­tor.”

To­gether, the mort­gage and fur­lough life­lines have helped mil­lions of peo­ple cope with the Covid cri­sis.

Around 2m bor­row­ers have taken a mort­gage hol­i­day, and as many as 9.4m work­ers were put on fur­lough. The FCA urged banks to be flex­i­ble with home­own­ers in dif­fi­culty af­ter mort­gage hol­i­days end, grant­ing ex­ten­sions or re­struc­tur­ing pay­ments if needed. “The ma­jor­ity of cus­tomers who have had a pay­ment hol­i­day are ex­pected to re­sume full repayment. How­ever, many will re­main in fi­nan­cial dif­fi­culty,” the watch­dog said. “Some con­sumers will con­tinue to be im­pacted by coro­n­avirus, while oth­ers will be newly im­pacted in the com­ing months.”

Mean­while, doorstep lender Prov­i­dent Fi­nan­cial ex­pects a surge in de­mand later this year if there is a rise in un­em­ploy­ment af­ter the end of the fur­lough scheme.

Boss Mal­colm Le May said as many as 2.4m more peo­ple could be locked out of bor­row­ing from main­stream banks as a re­sult. His firm – known as the “Provvy” – of­fers high-in­ter­est doorto-door lend­ing to cus­tomers with a poor credit his­tory.

Its car loan di­vi­sion, Money­barn, handed out a record 4,500 loans in July with about 40pc of them go­ing to key work­ers. Mr Le May said the av­er­age car loan was about £8,000 and that driv­ers seemed to be buy­ing cars to avoid com­mut­ing on pub­lic trans­port.

Prov­i­dent pledged to re­pay fur­lough money it took from the Gov­ern­ment when the coro­n­avirus hit. It is to cut up to 300 jobs.

Around 9.4 mil­lion work­ers were placed on Chan­cel­lor Rishi Su­nak’s fur­lough pro­gramme

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