Mortgages: Coronavirus

Treasury written question – answered on 28th April 2020.

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Photo of Stephen Morgan Stephen Morgan Shadow Minister (Defence) (Armed Forces and Defence Procurement), Shadow Minister (Defence)

To ask the Chancellor of the Exchequer, what steps he is taking to support people facing financial difficulties as a result of the covid-19 outbreak that will not benefit from the recent interest rate reduction by the Bank of England as their mortgage rate is determined by LIBOR.

Photo of John Glen John Glen Minister of State (Treasury) (City), The Economic Secretary to the Treasury

Banks and building societies are ready and able to support consumers impacted by COVID-19. On the 17 March, the Chancellor announced on behalf of the sector that banks and building societies will offer a 3-month ‘mortgage holiday’ for borrowers that are struggling with their repayments. This forbearance measure will enable affected borrowers to defer their mortgage payments for up to 3 months. This measure has also been extended to Buy to Let landlords struggling as a result of their tenants being unable to meet their rental repayments.

Lenders have also agreed to a three-month moratorium on residential and buy to let possession action to start immediately to provide customers with reassurance that they will not have their homes repossessed at this difficult time.

The FCA have also published guidance on payment holidays and repossession action for firms that engage in mortgage lending activities. You can view the guidance here:

https://www.fca.org.uk/consumers/mortgages-coronavirus-consumers

Decisions concerning the pricing of loans, including the level of interest charged, remain commercial decisions for lenders, and the Government does not seek to intervene in these decisions. Many lenders have chosen to pass on the recent base rate cut to their customers but this will not necessarily apply to all mortgage products.

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