By Berengere Sim
Of Financial News
The Bank of England wants U.K. lenders to be lenient when assessing whether borrowers who opted for a mortgage payment holiday continue to face hardship due to the pandemic.
The BoE’s Prudential Regulation Authority said Friday that lenders must make “well-balanced and consistent decisions” that take into account the potential impact of the coronavirus.
More than 1.8 million mortgage payment holidays have been approved by lenders across the U.K., after it was first announced in March as part of the government’s broader fiscal support package to provide support to households and businesses during the Covid-19 crisis, according to figures released by the U.K. Treasury Friday.
The call comes as the Financial Conduct Authority proposes to extend the mortgage payment holiday for borrowers until Oct. 31. The extension would be available to borrowers experiencing financial difficulty at a later date.
The ban on repossessions of homes will also be delayed until the end of October.
The payment holidays provided shouldn’t have a negative impact on credit files, the regulators said.
“Everyone’s circumstances will be different, so when homeowners can pay some or all of their mortgage, they should work with their lender on a plan; but if they are still struggling, I want them to know that help is there,” said John Glen, the economic secretary to the Treasury, in a statement.
Interim chief executive of the FCA, Christopher Woolard, said that anyone who continues to need help should get help from their lender. “We expect firms to work with customers on the best options available for them, paying particular attention to the needs of their vulnerable customers, and to provide information on where to access help and advice.”
The FCA said it will take comments on the proposals made until May 26 and, following that, will issue final guidance.