As the furlough scheme and existing support measures come to an
end on 31 October 2020, the banking and finance industry has
reiterated its commitment to support mortgage, personal loan
and credit card customers facing financial difficulty.
In line with the latest guidance for consumers from the
Financial Conduct Authority (FCA), lenders will continue to
offer a range of options to support borrowers who face
financial difficulty. The FCA’s latest customer research also
shows that almost a third of adults (31 per cent) have seen a
decrease in income, with households seeing income fall by a
quarter, on average.
To ensure these households are supported, all lenders will
offer tailored options to support customers through payment
difficulties resulting from Covid-19, taking into account their
personal circumstances including any local restrictions that
may be imposed. Support will be available both for those who
have previously taken a payment deferral and those who are
newly in financial difficulty.
Ongoing support for mortgage customers may include:
- Extending the length of the mortgage term.
- Changing the type of mortgage (e.g. a temporary change to an
interest-only mortgage).
- Deferring payment of the interest or the sums due
- Capitalising the interest accrued, i.e. adding the added
interest owed to the balance of the loan.
Ongoing support for credit card and personal loan customers may
include:
- Accepting reduced payments for a further short period if the
customer’s circumstances are expected to improve.
- Accepting reduced payments via a longer-term repayment plan
if the customer is experiencing more severe financial
difficulties.
- Considering whether the refinancing of the outstanding credit
at a sustainably affordable payment rate is an option which
will be in the customer’s interests.
Eric Leenders, Managing Director of Personal Finance,
UK Finance, said:
“The banking and finance industry is providing
unprecedented levels of support to help customers through the
Covid-19 crisis. We understand that many people’s finances will
continue to be impacted by this pandemic and want to reassure
them that ongoing help is available, tailored to their
individual circumstances.
“It will always be in the best interest of customers to
resume making payments on their mortgage, loan or credit card
if they’re able to do so.
“However, anyone still experiencing financial difficulty
should get in touch as early as possible to discuss the options
available, starting by checking their lender’s website which
will be updated with the latest information.”
More than 4.4 million payment deferrals have been
granted
The support provided by lenders builds on more than six months
of help for customers. The latest figures from UK Finance
reveal that the number of customers on a payment deferral has
significantly decreased in recent months. Of the 4.4 million
payment deferrals granted across mortgages, credit cards and
personal loans since the start of the pandemic, 323,700 are
currently still in place.
Lenders have now provided a total of 2.5 million mortgage
payment deferrals since the start of the pandemic. As of 9
October 2020, there were an estimated 162,000 mortgage
customers still on a payment deferral, down from a peak of 1.8
million in June. The industry has also provided over 1.13
million payment deferrals on credit cards, of which 97,300 are
still in place. Another 793,000 payment deferrals have been
provided for personal loans, of which 64,400 are still in
force. In addition, over 27 million personal current accounts
have had an interest-free buffer applied to their arranged
overdraft.
It is always in a customer’s best interest to resume payments
if they are able to do so. Evolving industry analysis suggests
that over three quarters of mortgage, personal loan and credit
card customers whose payment deferral has come to an end have
now returned to making repayments.
