Mortgage and credit payment holiday application period extended until March as new England national lockdown is enforced.

For several months, the Financial Conduct Authority said that October 31 would be the application deadline for coronavirus-related payment deferrals on mortgages and consumer credit agreements. However, on the very last day, the regulator announced that this deferral period would be extended until March 31 2021. The extension is likely to be, at least partially, connected with the Government’s announcement of the second national lockdown, but whatever the FCA’s motives were, lenders now need to respond appropriately to the new requirements.

Mortgage borrowers now have until March 31 to request payment deferrals on their account for up to six months. Anyone who has not previously requested a deferral will be able to request up to two separate three-month deferrals. Those who have previously benefit from one three-month deferral will now be able to apply for another payment holiday of the same duration – this right will apply regardless of whether the first deferral period is still in force, or whether they have since resumed payments following the end of the deferral period. Existing deferrals can be extended until July 31, provided these payment breaks cover no more than six payments in total. 

A lender must not re-possess a borrower’s home, without the borrower’s agreement, until at least January 31.

Similar rules apply to personal loans, credit cards, motor finance, rent-to-own, buy-now-pay-later and pawnbroking arrangements. Again, the application deadline is March 31 and borrowers can receive six months’ worth of payment deferrals, and anyone who already has a three-month payment deferral can apply for an additional three-month holiday.

High cost short-term credit customers are only entitled to a one-month deferral under these rules. Anyone who hasn’t previously received a deferral on this type of loan can now apply for a one-month payment break.

These payment deferrals will not be reported on borrowers’ credit files.

The FCA stresses though that anyone who is able to do so should continue to make the repayments on their mortgage, loan or other arrangement, rather than applying for a deferral.

These additional payment deferrals are not available to anyone who has already had six months’ worth of deferrals, or who has already had a one-month payday loan deferral. In these circumstances, where the borrower remains in difficulty, the lender should provide tailored support to the customer in line with previous FCA guidance that was intended to apply before the deferral deadline was extended.

Sheldon Mills, Interim Executive Director of Strategy and Competition at the FCA said: 

“We are working with lenders to ensure enhanced support remains available to borrowers struggling financially following changes in the coronavirus situation across the UK.

“Tailored support will still be offered and remains the most appropriate option for many borrowers, but we are proposing to extend payment deferrals for additional support. We also want to make sure no one has their home repossessed during this time.

“It is in borrowers’ own long-term interest only to take a payment deferral when absolutely necessary. Those that are able to keep paying, should do so. This allows support to be targeted to those most in need.”

The information shown in this article was correct at the time of publication. Articles are not routinely reviewed by Scott Robert and as such are not updated. Please be aware of the facts, circumstances or legal position may change after publication of the article.