FCA rejects calls to show payment holiday extensions on credit records


Borrowers can apply for a payment holiday until October 31

Homeowners who are struggling to repay their mortgage bills because of the coronavirus crisis will be able to pause their repayments for a further three months, the Financial Conduct Authority (FCA) confirmed.

However, the regulator stressed that customers who can afford to restart repayments, should do so.

Borrowers can apply for a payment holiday until October 31. The present ban on lender repossessions of homes will also continue until this date.

Payment holidays will not have an adverse impact on borrowers credit files. Calls from lenders and other bodies had urged that credit reference agencies should be allowed to mark credit files of borrowers who had taken a second mortgage payment holiday.

Nationwide Building Society was among the lenders which called for records to include a notification.

However, lenders may factor payment holidays into their future lending decisions based on information obtained from other sources, such as bank accounts.

Banks and building societies are to contact customers who are nearing the end of repayment holidays to offer options on repaying the missed payments, in the cases where they can resume payments.

Borrowers who are still struggling with their repayments may be offered more information on debt advice, as well as options such as part repayments or a further three months break.

The guidance will come into effect from June 4.

Three-month mortgage payment holidays were offered to homeowners from March when the lockdown was imposed.

Over 1.8 million payment breaks have been taken by borrowers to date.

Trade body UK Finance estimated that between 60 and 70 percent of those would be able to resume full payments after three months.

Christopher Woolard, interim chief executive at the FCA, said: The measures we have confirmed today will mean anyone who needs to can get help from their lender if they are still struggling to pay their mortgage due to coronavirus.

It is important that if a consumer can afford to re-start mortgage payments, it is in their best interests to do so.

Customers should talk to their firm about the best option available for them.