Banks Extend Payment Breaks For Mortgage Customers

By Irene Madongo
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Law360, London (November 18, 2020, 2:49 PM GMT) -- Building societies and banks have said they will extend a period of relief to allow homeowners to defer their mortgage payments until the end of July next year, in line with regulatory efforts to help people who are struggling financially because of COVID-19.

Lenders also said they would not enforce a warrant for possession against borrowers before Jan. 31, trade body UK Finance said, as its 250 members seek to comply with the Financial Conduct Authority's announcement this month that the mortgage payment deferral scheme will be extended from the end of October this year to July.

The FCA has been in "listening mode throughout the pandemic," Robin Fieth, chief executive of the Building Societies Association, said on Tuesday. The organization says it represents all Britain's 43 building societies — all of which are all participating in the scheme. The group also represents six credit unions, some of which offer mortgages and are also taking part.

"Whilst the best advice is always to pay your mortgage if you are able to, anyone who is struggling to do this could benefit from the extension to the mortgage payment deferral scheme," Fieth said.

The watchdog's final guidance includes suggestions from the sector, such as not excluding people from the scheme if they have missed a payment after a deferral period, Fieth added.

Borrowers who have had a full six-month payment deferral on their mortgage but are still struggling should approach their lender to discuss assistance, said UK Finance, which also urged eligible customers to apply for the scheme in good time.

Lenders have granted 2.6 million mortgage payment deferrals since the start of the pandemic. Industry analysts have suggested that more than 80% of borrowers are now able to make repayments.

The FCA announced this month that it plans to extend relief measures for people struggling to make consumer credit and mortgage payments after the government announced a new lockdown this month that is due to end on Dec. 2.

The finance watchdog said in July that it has extended payment freezes and loan holidays for consumers with credit products such as payday loans who are struggling financially because of the pandemic.

--Additional reporting by Najiyya Budaly and Lucia Osborne-Crowley. Editing by Ed Harris.

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