The Financial Conduct Authority (FCA) has updated its guidance to lenders about the support they should offer mortgage borrowers experiencing payment difficulties as a result of coronavirus.

The mortgage industry has so far granted 2.6 million mortgage payment deferrals since the start of the pandemic, of which 140,000 are currently still in place.

The regulator has told lenders that:

• Those who have not yet had a payment pause should be eligible for payment deferrals of six months in total.
• Borrowers with a current payment deferral can top up to six months in total.
• Those who have previously took a payment holiday of less than six months can top up to a total of six months. This includes those receiving tailored support and those who are behind on payments.
• Borrowers who have already had a full six months of payment deferrals will not be eligible for a further payment deferral. But firms will provide tailored support appropriate to their circumstances. This may include the option to defer further payments.

The financial watchdog also said no one should have their home repossessed without their agreement until after 31 January 2021.

Lenders confirmed they are ready to extend support to borrowers. Eric Leenders, managing director of personal finance at UK Finance, which represents banks, said:  “Lenders are continuing to provide unprecedented levels of support to help customers through the Covid-19 crisis, with over 2.6 million mortgage payment deferrals already granted.

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“As the impact of the pandemic continues to be felt across the country, the banking and finance industry stands ready to deliver ongoing assistance to those in need. ”

What should you do now?

Borrowers will have until 31 March 2021 to apply for an initial or a further payment deferral.

After that date, you can extend existing payment holidays to 31 July 2021, subject to the maximum six months allowed.

If you haven’t yet taken a payment holiday, but think you will need the full six months, you should apply in good time before your February 2021 payment is due.

Head of Policy at debt charity StepChange, Peter Tutton, added: “The extension of payment deferrals for mortgage borrowers will come as a welcome relief to those who have yet to take full advantage of the scheme and are in difficulty due to ongoing coronavirus restrictions.

“We strongly echo the FCA’s recommendation that consumers should keep up with payments on their mortgage if they can afford to do so and should only seek support where such support is absolutely necessary.”