Question to the HM Treasury:

To ask Her Majesty's Government what additional support they plan to provide to homeowners after the mortgage payment holiday scheme ends.

Following the Coronavirus outbreak, the Government worked quickly with lenders and financial regulators to give people access to payment holidays on their mortgages. This gives customers a much-needed respite period, where no repayments on these products are due. It was necessary to bring this temporary measure in, in order to give customers time to smooth out their finances that may have taken a hit by the pandemic. As borrowers still requiring assistance after 31 October could be in serious financial distress the FCA believe it is right that lenders are able to understand their financial position in order to lend responsibly

The FCA published guidance on mortgage payment holidays on 14 September setting out that firms should continue to provide support through tailored forbearance options for those borrowers that are facing ongoing financial difficulties. This could include granting new mortgage payment holidays. As part of this guidance any forbearance granted beyond 31 October will be reflected on the consumer’s credit file in the usual manner.

The Government also has support in place for qualifying borrowers that cannot afford their mortgage interest. Support for Mortgage Interest (SMI) provides financial help to homeowners who qualify for an income related benefit. Claimants must be in receipt of Universal Credit for nine assessment periods (nine months), before receiving support through the SMI scheme. The loan is then repayable upon sale of the property. The primary purpose of SMI is to enable people to stay in their homes without fear of repossession.