Mortgage lenders support extension to moratorium on possessions

Further to the FCA’s consultation announced today, mortgage lenders support the further extension to the moratorium on possessions to 1 April 2021. The extension will help provide reassurance to both residential and buy-to-let borrowers that they will not have their homes repossessed at this difficult time. The continued support from banks and building societies follows the government’s announcement to extend the ban on bailiff activity in England until 21 February 2021. Wales and Scotland have banned rental evictions until 31 March 2021.

The mortgage industry’s continued commitment to the possessions moratorium sits alongside payment deferrals and additional forbearance measures which lenders continue to provide to customers that are struggling with the financial impact of the pandemic. Under the extension, members of UK Finance and the Building Societies Association will agree not to seek, or enforce, a warrant for possession before 1 April 2021, unless there are exceptional circumstances such as a customer requesting proceedings to continue or when the property is in vacant measures. This latest extension means the measures will have been in effect for 12 months by its end date.

For customers already in arrears before Covid-19 and who continue to be unable to make payments towards their mortgage, lenders will be in contact to work towards resolving their case, this could include customers choosing for possessions to go ahead. It will always be in the long-term interest of customers who are able to do so to resume making payments, but for anyone who is still struggling, ongoing support will be available. Lenders continue to show flexibility to borrowers in financial difficulty and possession is always a last resort, however, it’s always better for customers to pay if they can otherwise the debt will continue to increase.

Eric Leenders, managing director of personal finance at UK Finance, said: “The banking and finance industry is committed to providing ongoing support to those facing financial difficulty as a result of the pandemic.

“The industry is fully supportive of a moratorium on possessions remaining in place until 1 April 2021 to ensure customers do not lose their home at this difficult time. This is part of a package of support provided by lenders for those who need it, including payment deferrals and tailored assistance. It is vital that customers who are concerned about their finances go online or contact their lender to understand what options and support are available to them.”

Paul Broadhead, head of mortgage and housing policy at the Building Societies Association, said: “Mortgage lenders recognise the unique circumstances which are affecting some borrowers during the pandemic, a situation which can only be exacerbated by the current lockdown and the need for some businesses to temporarily close.

“Normal forbearance measures will continue to be in operation however long the pandemic persists, but we are also asking government to do their part, in the first instance by reducing the time that borrowers must wait for a Support for Mortgage Interest loan from the current 39 weeks to 13 weeks, adding to the options available, particularly for those who were in financial difficulty before the pandemic.”

UK Finance and the Building Societies Association will respond in support of the Financial Conduct Authority’s (FCA) draft guidance published today to extend the regulatory flexibility that allows lenders to continue to provide certainty to customers.

As part of the ongoing support lenders are providing to customers, banks and building societies have extended the provision of mortgage payment deferrals of up to a maximum of six months until 31 July 2021. Consumers have until 31 March to apply and will need to apply in good time before 31 January if they are eligible for, and require, a full six-month deferral. For borrowers who have already taken a total of six months of payment deferrals and continue to need additional assistance, all lenders will offer tailored support, taking into consideration personal circumstances including any Covid-19 restrictions that may be imposed.