Mortgage holidays were introduced by Rishi Sunak to support British people struggling with coronavirus issues. The rules, in a nutshell, allow people to temporarily halt their mortgage repayments for up to three months.
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The new legislation was introduced to keep people afloat as their finances took a hit.
Their repayments could be halted but the potential interest on the mortgage would still accrue, adding additional long term debt.
Rishi Sunak detailed repeatedly that he would extend the supportive measures if need be and that he was willing to do “whatever it takes” to help the economy.
It now appears that that promise is starting to come to fruition, as he recently extended both the furlough and mortgage holiday scheme.
On May 22, the FCA made a proposal which outlined continued support for customers still struggling to pay their mortgages due to coronavirus.
Its announcement confirmed the following: “The proposal outlines the options firms will be required to provide customers coming to an 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 October 31, 2020.
“For those who are still experiencing temporary payment difficulties due to coronavirus, firms should continue to offer support, which could include extending a payment holiday by a further three months.”
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While the announcement was very clear, it did highlight that additional inputs from lenders would be needed.
It was confirmed that the guidance will not prevent firms from offering more favourable forms of assistance to the customer.
On top of this, firms were encouraged to consider signposting customers towards debt advice where needed.
While the extension is coming from the governing bodies involved, there is clear evidence that the FCA expects firms to be flexible with their accommodation.
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As the announcement went on to conclude: “Debt advice may be helpful for customers coming to the end of payment holidays and may be particularly useful for consumers with pre-existing payment shortfalls or who are likely to be in longer-term financial difficulty.
“When implementing this guidance, firms should be particularly aware of the needs of their vulnerable customers and consider how they engage with them.
“For customers who aren’t able to use online services (such as digital channels), firms should make it easy for customers to access alternatives.”
Because of these additional elements, the FCA plans to welcome “comments on these proposals”, highlighting that further details will be forthcoming.
These comments, suggestions and perhaps even criticisms will be welcomed by the FCA until 5pm on Tuesday, May 26.
The organisation detailed that finalised guidance will be issued shortly after this.
Affected customers will likely be relieved by all of this and the incoming clarity will provide them with exact instructions on their next moves.
Interestingly, further payment holidays such as credit card and small loan freezes may also have extensions on the horizon.
The FCA pointed out that the guidance published only applies to mortgages but consumer credit products that are covered by separate guidance will be “updated in due course.”
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