Mortgage payment holidays should continue for those still facing financial difficulties because of the pandemic and be offered to those whose financial situation has become newly affected says the Financial Conduct Authority (FCA).
The regulator has issued new guidance to lenders as thousands of borrowers are coming to the end of their current payment holidays.
Announcing the new guidance it said: “The measures mean firms will offer further short and longer-term support reflecting the circumstances of their customers.
This could include extending the repayment term or restructuring of the mortgage.
“Where consumers need further short-term support, firms can continue to offer arrangements for no or reduced payments for a specified period to give customers time to get back on track.”
Under the new guidance lenders will prioritise support for those borrowers most at risk of harm or who are facing the greatest financial difficulties.
It stresses the need for firms to deliver outcomes that are individually tailored to need rather than adopt a ‘one size fits all approach’.
The regulator intends to monitor lenders to ensure borrowers are treated fairly according to their individual need. Lenders must also be clear about the credit implications of any support they are given.
FCA Interim Chief Executive Christopher Woolard said: “Some consumers will continue to be impacted by coronavirus in the coming months, or be impacted for the first time.
Consumers in these situations will benefit from firms providing them with tailored support.
“However, it is very important that consumers who can afford to resume mortgage payments should do so for their own long-term interests and so that help can be targeted at those most in need.”
Eric Leenders of UK Finance said: “The banking and finance industry is committed to providing ongoing support to those facing financial difficulty as part of our clear plan to get the country through this crisis.
“Lenders understand that many households will continue to see their finances squeezed as the pandemic continues and will be offering a range of support for those who need it.
It is essential for customers to ho online or contact their lender to consider the best solution available to them.
“Firms will be communicating with customers whose mortgage payment deferral is coming to an end to discuss the options available.
Those who can afford to resume payments should do so, as it will always be in their best interests in the long run.”