It is expected the scheme, which allows borrowers who are struggling to pay their mortgage because of the consequences of the pandemic to defer payments, will be extended until 31 January.
The FCA is proposing anyone who has not used the mortgage support scheme can request two payment deferrals of up to six months in total, before the end of January.
Borrowers who are currently on their first three-month payment break, or households who have taken an initial deferment and have since begun repaying, will be eligible to defer their mortgage payments by another three months.
The consultation comes after Prime Minister Boris Johnson announced England would be put under lockdown restrictions from 5 November.
As many businesses prepare to shut again, the government has extended its Coronavirus Job Retention Scheme and mortgage payment deferral scheme to support households suffering financial hardship because of the pandemic.
Borrowers, however, are being urged to only use the mortgage scheme if they not able to keep up with their monthly commitments.
Sheldon Mills, interim executive director of strategy and competition at the FCA, said: “Tailored support will still be offered and remains the most appropriate option for many borrowers, but we are proposing to extend payment deferrals for additional support. We also want to make sure no one has their home repossessed during this time.
“It is in borrowers’ own long-term interest only to take a payment deferral when absolutely necessary. Those that are able to keep paying, should do so. This allows support to be targeted to those most in need.”
Credit rating
Under the FCA’s proposals, a payment deferral would not be reported as a missed payment on the borrower’s credit file, but the borrower’s ability to obtain credit in the future could still be affected.
If borrowers are offered tailored support from their lender this can be recorded on the borrower’s credit file. Lenders should tell borrowers where this is the case.
Households who have already had two payment deferrals of up to six months in total, or those who have agreed alternative repayment support, will not be eligible for further help under the scheme.
Emma Harvey, mortgages expert at MoneySuperMarket, said it welcomed the FCA’s plans to extend payment holidays for mortgages.
She added: “As with any change to your borrowing arrangements, you should always make sure you understand how it will impact your payments moving forward to make sure you can afford any changes.
“If you’re unsure about what to do don’t hesitate to contact your provider directly and they will be able to provide guidance. You might also be able to negotiate a new payment plan tailored to your individual circumstances.”
The regulator is also proposing that no one will have their home repossessed without their agreement until after 31 January 2021.
The consultation closes at 10am on Thursday 5 November. Final guidance will be published as soon as possible after the comment period closes.
