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Covid Resurgence Spurs U.K. Watchdog to Extend Mortgage Help

Silla Brush
·2 min read

(Bloomberg) -- British mortgage borrowers have until the end of January to apply to delay payments as regulators try to soften the blow from this week’s new national lockdown.

The U.K. Financial Conduct Authority plans to give borrowers another three months to request a payment deferral and is also proposing that no-one will have their home repossessed without their agreement until after that date. The previous application window expired at the end of October.

“We are working with lenders to ensure enhanced support remains available to borrowers struggling financially following changes in the coronavirus situation across the U.K.,” said Sheldon Mills, the FCA’s interim executive director of strategy and competition, in a statement. The regulator is asking for comment on the proposals by Nov. 5.

The extension would mean those who have not yet had a payment deferral will be eligible for two postponements of up to 6 months in total, while those who currently have an initial delay, will be eligible for another one of up to 3 months. Borrowers who already have had two deferrals or are receiving alternative support from their lenders aren’t eligible.

After the virus outbreak in the spring, U.K. mortgage lenders including Lloyds Banking Group Plc and NatWest Group Plc granted 1.8 million mortgage holidays. That number declined to about 162,000 last month, according to U.K. Finance, the industry trade association.

The industry and authorities are racing to extend more help to dampen the effect of the resurgence in the virus and new government restrictions on consumers’ finances and the broader economy.

While “arrangements are being put in place, customers seeking to access this support do not need to contact their lenders yet,” said Eric Leenders, managing director of personal finance at U.K. Finance. “Lenders will provide information shortly on how to apply for this support.”

Earlier on Monday, the FCA said consumers could seek a 6-month deferral to payments for personal loans, credit cards, motor finance and high-cost short-term credit products. The regulator said consumers who already had received a payment deferral could also seek a second one.

(Updates with comment from lobby group in seventh paragraph.)

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