Earlier this week, it was reported that the Financial Conduct Authority (FCA) was considering extending payment holidays to avoid borrowers falling into arrears and being at risk of repossession.
The FCA said it would be meeting with banks this week to discuss what support should be available once the payment freezes end, and said its plans will be confirmed in the coming weeks.
Paul Broadhead, BSA’s head of mortgages and housing said a blanket extension to payment holidays would not necessarily be in the interest of borrowers as it would mean lenders would not have an insight into their individual financial circumstances.
“If a borrower is likely to be affected for a longer period it is important that they speak to their mortgage lender. By speaking to their lender, they will receive tailored support appropriate for their circumstances,” he added.
Broadhead said: “Pausing mortgages for an extended period could also hinder lenders’ capacity for new lending just when it is needed to support the UK’s recovery from this crisis.”
Non-bank trade associations have already come together to ask the Treasury for support as they do not have the same access to funding banks have, limiting their ability to provide borrowers with mortgage holidays.
The representatives proposed schemes to the Bank of England and the Treasury to support them in offering payment holidays, but no action has been taken.
Vic Jannels, CEO at the Association of Short Term Lenders (ASTL), said: “We believe that our members will be an important part of the solution as and when we exit this pandemic and rebuild our economy.
“It is important that we work together on an effective and diverse financial response to the current situation in a way that protects consumers and supports businesses.”
Looking for the best solutions
UK Finance said it continued to work with the government and regulators to find a solution for borrowers during the crisis.
A spokesperson said: “All providers are ready and able to offer support to their customers who are impacted directly or indirectly by Covid-19.”