FCA announces further proposals to support mortgage borrowers impacted by coronavirus
In September, the FCA announced tailored support for borrowers affected by coronavirus (Covid-19) after 31 October, which it would keep under review as the pandemic evolved.
As a result of increasing restrictions announced in recent weeks, the FCA is proposing to enhance these measures to provide further support to consumers impacted by coronavirus.
What are the FCA’s proposals?
The FCA is proposing to extend the availability of payment deferrals to support borrowers who are experiencing payment difficulties because of coronavirus.
This will mean that:
- those who have not yet had a payment deferral will be eligible for 2 payment deferrals of up to 6 months in total
- those who currently have an initial payment deferral, will be eligible for another payment deferral of up to 3 months
- those who have resumed repayments after an initial payment deferral will be eligible for another payment deferral of up to 3 months
It’s important that borrowers who can afford to make repayments continue to do so.
The FCA is urging consumers not to contact their lender until the enhanced measures are in place. Lenders will soon provide further information.
Under the FCA’s proposals, borrowers would have until 31 January 2021 to request a payment deferral.
A payment deferral under these proposals would not be reported as missed payments on a borrower’s credit file. This does not mean that consumers’ ability to access credit will be unaffected in future, as lenders may take into account a range of information when making lending decisions.
The FCA is also proposing that no one will have their home repossessed without their agreement until after 31 January 2021.
Some borrowers would not be eligible for a payment deferral, including because they:
- have already had 2 payment deferrals (of up to 6 months in total), and tailored support will be more appropriate to their circumstances
- have agreed alternative support with their lender
Tailored support may be reported on a borrower’s credit file, and lenders should inform borrowers where this will be the case.