Dave Miller: Mortgage holidays could cause future struggles
Dave Miller, client account manager at Spicerhaart Corporate Sales believes that while extending mortgage holidays may be welcomed in the short run, “there is a real risk that it is storing up trouble for the future.”
The Financial Conduct Authority (FCA) has laid out guidelines for mortgage providers and lenders in light of the coronavirus.
The new measures include granting customers a payment holiday for an initial period of three-months.
Miller believes that this will: “Add to the interest burden once the holiday period is over and that will place some borrowers under real strain, especially those that were already struggling with arrears prior to the current crisis.”
He said: “We’ve all had that back-to-work feeling after a long holiday. For borrowers enjoying an extended mortgage holiday, this could be much worse than that.”
Furthermore, the FCA has issued new guidance to firms participating in the government’s Coronavirus Business Interruption Loan Scheme.
This scheme intends to support lending to small and medium-sized enterprises (SMEs) impacted by coronavirus of up to £5m.