Mortgage lenders in new offer of support

THE Financial Conduct Authority has this week issued updated guidance for mortgage lenders to let them know what continuing support should be available to borrowers who are struggling to keep up with their payments as the coronavirus crisis continues to take its toll on incomes and jobs. The regulator has confirmed this new support will be in force from today and Sheldon Mills, interim executive director of strategy and competition at the FCA, said: “The announcement ensures 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.” Commenting on the announcement, head of policy at StepChange, Peter Tutton, said: “The extension of payment deferrals for mortgage borrowers will come as a welcome relief to those who have yet to take full advantage of the scheme and are in difficulty due to ongoing coronavirus restrictions.” Although StepChange is broadly in agreement with the guidance issued from the regulator, Tutton reckons some borrowers will still face challenges.

He said: “Our main concerns are for those whose payment deferrals have come to an end and are unable to resume repayments, as their only option will be whatever their lender offers.

“Some people may feel under pressure to resume payments due to concerns about negative credit reporting and use credit to do so, which could lead to more serious problems later down the line.

“Aside from more consistent forbearance from different lenders, there is a need for Government to consider how the underlying mortgage safety net can be strengthened, given the long tail of payment problems likely to arise from unemployment.”