During the initial phase of the pandemic, payment holidays provided mortgage borrowers with immediate and temporary support. They have helped millions of consumers through the immediate impacts of the current emergency and helped firms provide support at an unprecedented scale.

UK Finance has revealed that so far, lenders have granted a total of two million mortgage payment deferrals, 1.05 million credit card payment deferrals and 707,000 personal loan payment deferrals, as well as applying over 27 million overdraft buffers to primary current accounts.

Initial industry data suggests that of those whose mortgage payment deferral has come to an end, over 70% have resumed making full payments; however the industry recognises that some borrowers may continue to need financial support during these unprecedented times.

The majority of customers who have had a payment holiday are expected to resume full repayment. However, many will remain in financial difficulty.

The FCA has now called on lenders to provide “tailored support” to homeowners still under financial pressure beyond the end of October, when applications for a three-month mortgage holiday will no longer be accepted. 

The regulator has said this support needs to “reflect the uncertainties and challenges that many customers will face in the coming months.” 

It said banks and lenders should consider “a range of different short and long-term support options to reflect the specific circumstances of their customers.” Such options could include extending the repayment term or restructuring of the mortgage.

The FCA confirmed that it did not expect to extend the October 31 deadline for mortgage holiday applications but said it would “keep this under review depending on how the wider situation develops.”

Christopher Woolard, interim chief executive at the FCA, said: “It is important that consumers who can afford to resume mortgage payments should do so. However, we understand that borrowers facing payment difficulties because of the pandemic will continue to face uncertainty and may also experience temporary interruptions in income. We are proposing that firms contact their borrowers in good time before the end of a payment holiday, and work with them to come up with a tailored plan to help get them back on track. Firms should not take a ‘one size fits all’ approach.”

Eric Leenders, managing director of personal finance at UK Finance, added: “The industry has provided unprecedented support to customers as part of its clear plan to get Britain through the coronavirus crisis. As we begin to arrive at a ‘new normal’, a more tailored approach to customer support using a range of measures will likely be more suitable for those customers who continue to experience financial difficulties or find themselves newly affected by the ongoing crisis.  

“It is important for customers who are able to  resume their mortgage payments do so, however lenders are fully prepared to support any customers who  face difficulty and it is vital that those who are facing payment difficulties get in touch with their provider as soon as possible.”