Published On: Sat, Oct 10th, 2020

Mortgage alert: Will Rishi Sunak’s Job Support Scheme plans harm lenders? Warning issued | Personal Finance | Finance

Mortgage holders and the overall property market have been drastically impacted by coronavirus over the course of the year, with lenders both tightening their criteria and pulling products from the market. On top of this, new analysis from the online mortgage broker Trussle details additional difficulties may be on the horizon.

As Miles Robinson, the Head of Mortgages at Trussle, explained: “The Chancellor’s announcement of the Job Support Scheme extension to tackle local lockdowns will be welcomed by many workers in the worst-affected industries.

“Following the impact that the furlough scheme had on the property market, many borrowers will have questions about how the new scheme might affect their mortgage.

“Homeowners and house hunters are already facing increased scrutiny from lenders, tighter criteria and rising house prices.

“If lenders’ actions following the furlough scheme are anything to go by, those placed on the new Job Support Scheme will face unprecedented challenges.

READ MORE: Boris Johnson vows to reduce mortgage deposits

Mortgage holders were among the first groups of people to receive coronavirus themed support from the government.

In early 2020, Rishi Sunak allowed mortgage holders to utilise payment holidays, where they could effectively pause their repayments for up to three months while they struggled financially.

These payment holidays were eventually extended and similar plans were laid out for other forms of debt such as credit card payments.

However, in September the Financial Conduct Authority (FCA) confirmed that while additional support will still be provided into 2021, the mortgage holiday scheme itself would not continue beyond October 31.

“This additional guidance will come into force on 16 September 2020…

“…firms will prioritise support for borrowers who are at most risk of harm, or who face the greatest financial difficulties. The new guidance reinforces the need for firms to deliver outcomes that are right for individual borrowers rather than adopting “one size fits all” solutions. The FCA will be monitoring firms to ensure borrowers are treated fairly having regard to their individual circumstances.

“Firms will also signpost borrowers to the support they need in managing their finances, including through self-help and money guidance, or refer borrowers to organisations that can provide free debt advice if this meets their needs and circumstances.

“Where borrowers have taken, or are taking, payment deferrals under our existing guidance and require further support from lenders these further arrangements can be reflected on credit files in accordance with normal reporting processes. This also applies to borrowers newly affected by coronavirus who receive support from their lender after October 31. This will help to ensure that lenders have an accurate picture of consumers’ financial circumstances and reduce the risk of unaffordable lending. Firms are required to be clear about the credit file implications of any forms of support offered to borrowers.”

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