FCA highlights continued support for homeowners
The Financial Conduct Authority (FCA) has highlighted its continued support for homeowners in financial difficulty due to the coronavirus pandemic.
The FCA has urged consumers that are struggling to make repayments due to coronavirus to speak to their lenders about their available options.
A survey of 7,000 people conducted by the FCA found that 12 million people in the UK had low financial resilience; two million had developed this low financial resilience since February 2020.
Moreover, 36% of respondents who already had low financial resilience as well as a mortgage said they were likely to fall behind on repayments.
A further 36% of those with loans or credit cards were worried about repayments, and 42% of renters were worried about falling behind on rent payments.
Almost a third of adults (31%) have seen a decrease in income due to the pandemic, with households seeing income fall by a quarter on average; those from a black and minority ethnic background were more likely to be affected, with 37% of adults noticing a drop.
Sheldon Mills, interim executive director of strategy and competition at the FCA, said: “We want to remind consumers, especially those who are newly in financial difficulty, that lenders are able to provide you with support.
“There are options available to you which will reflect the uncertainties and challenges that many customers will face in the coming months. It is also important that households in serious financial difficulty seek debt advice for support.
“We understand that many people will continue to live in financial uncertainty as the impact of coronavirus continues.
“Our surveys have shown that younger and BAME consumers have been impacted more than others, with a large amount of the population already having seen significant changes to their financial stability since the start of the pandemic.”
Miles Robinson, head of mortgages at Trussle, added: “It is clear that mortgage payment holidays have proved a vital lifeline for some homeowners who have suffered financially as a result of the coronavirus pandemic.
“However, while it is important for people to be aware that there will be support available beyond October, we would urge homeowners to speak to their broker or lender to explore their options before making a decision.
“Homeowners across the UK are now facing new and varied lockdown restrictions.
“Following the FCA announcement, we could see lenders take varying stances towards homeowners who are struggling to meet their mortgage payments.
“In these unprecedented times, we would urge the FCA to take more substantial action beyond 31 October.
“There are inequalities in the housing market and this proposal may not go far enough to protect those most in need.
“It is important that during this difficult time the market maintains consistency and ensures that all consumers are treated equally, regardless of who their mortgage is with.”
Keith Richards, chief executive of the Personal Finance Society, said: “A big lesson from the recession in the early 1990s is that an inflexible approach to loan payments, and especially mortgage payments, can cause a great deal of harm that may take many years to overcome.
“If individuals have a payment plan in place, they will have a good chance of making up any shortfalls that accrue during these difficult times.
“We would encourage borrowers to contact their lender as soon as they find themselves in difficulty, as it is far easier to adjust repayment plans at an early stage than it is when debts have piled up and the lender has taken action based on a lack of information.”