UK watchdog expects mortgage payment holidays to end on Oct. 31

LONDON (Reuters) – Britain’s financial watchdog has called on banks to continue supporting homeowners struggling to pay their mortgages due to the COVID-19 pandemic, after saying it expected its requirement for lenders to offer repayment holidays to expire on Oct. 31.

FILE PHOTO: The logo of the new Financial Conduct Authority (FCA) is seen at the agency’s headquarters in the Canary Wharf business district of London April 1, 2013. REUTERS/Chris Helgren/File Photo

The FCA had extended the scheme, which allows mortgage customers to defer payments if they have been impacted by the coronavirus, for a further three months from its original June end-point.

The regulator said lenders should consider a range of alternative support measures for customers in financial difficulty, including extending repayment terms, but stopped short of requiring firms to offer such support.

“We are proposing that firms contact their borrowers in good time before the end of a payment holiday, and work with them to come up with a tailored plan to help get them back on track,” the FCA’s Interim Chief Executive Christopher Woolard said.

The watchdog said it is asking for comments from banks and other stakeholders before publishing finalised guidance in early September.

More than 1.9 million borrowers have taken advantage of the scheme to delay payments since it was launched in March.

Britain’s central bank separately said on Wednesday it expected lenders to take a closer look at the credit risk implications of COVID-related loan repayment deferrals as the scheme is phased out.

The Bank of England said tailored support measures brought in as the payment holiday scheme ends would be as good an indicator of increased credit risk as forbearance was before the pandemic.

The FCA on Wednesday proposed that borrowers coming to the end of a payment holiday who were in need of further support after the end of October would have that fact reflected on their credit files.

Customers who apply for a three-month payment deferral before the end of October should be granted one lasting until the end of January, the FCA said.

Reporting By Lawrence White and Iain Withers; Editing by Sinead Cruise and Jan Harvey

Source Article