Financial Conduct Authority says the extended relief mortgage holiday period is necessary to prevent a cliff edge of mortgage defaults.
In an article published by The Negotiator, it has been announced that that home owners are to be offered an further four months of mortgage holiday to help them through the Coronavirus crisis, if they are still struggling financially.
The original scheme was due to run out at the end of June but is now to finish at the end of October, although it is recommended that home owners should return to paying their mortgages where possible. The FCA is to consult with lenders until 26th May on the proposals and then introduce the extended scheme.
As Coronavirus has ravaged the economy, the mortgage holiday scheme has proved popular and some 1.8 million homeowners have taken it up, but the FCA is worried that these borrowers will then face a ‘cliff edge’ once the relief ends.
It is not clear yet whether an extended scheme would include landlords or those on the Help to Buy scheme. Both groups currently have the opportunity to take up a similar three-month mortgage holiday, although in landlords’ case only if their tenants are suffering financial hardship and can’t pay their rent.
All the mortgage holiday schemes were due to finish at the end of June, but comments by the Chancellor Rishi Sunak in recent days that the UK faces an unprecedented recession once the economy tools up again, and the ongoing social distancing rules that will keep many leisure and food businesses closed, mean mortgage holders will need longer to get back on their financial feet.
Christopher Woolard, Interim Chief Executive at the FCA, says: ‘Our expectations are clear – anyone who continues to need help should get help from their lender.
“Where consumers can afford to re-start mortgage payments, it is in their best interests to do so.”