The Department does not forecast future repossession rates. Currently, both arrears and repossession rates are close to historically low levels.
The Government is determined that lenders should treat borrowers fairly. The independent Financial Conduct Authority (FCA) is responsible for the regulations that are in place to protect customers in their dealings with financial services firms, and these include at their heart a requirement that firms must deal fairly with customers in payment difficulties. Their rules require lenders to consider a variety of options to help the borrower cope with these difficulties and any agreed solution should meet the needs of both borrower and lender.
The Government has been working to keep repossessions at a minimum at this time. The Government has announced unprecedented support for business and workers to protect them against the current economic emergency including an initial £330 billion of guarantees – equivalent to 15 per cent of UK GDP. This includes the extension to the Coronavirus Job Retention Scheme, which will help keep people in employment, protecting livelihoods and helping people to remain in their homes. On 17 March the Chancellor announced, on behalf of the sector, that banks and building societies will offer a ‘mortgage holiday’ for borrowers struggling financially as a result of COVID-19. This forbearance measure enables affected borrowers to defer their mortgage payments while they get back on their feet. Lenders have also agreed to a moratorium on residential and Buy-to-Let possession action to provide customers with reassurance that they will not have their homes repossessed at this difficult time. The Master of the Rolls, with the agreement of the Lord Chancellor, has also suspended all ongoing and new housing possession cases for 90 days from 27 March 2020. These measures have been strengthened by the Financial Conduct Authority’s new draft guidance for lenders which sets out the expectations for firms and the options available to their customers. This includes extending the application period for a mortgage holiday until 31 October so customers that have not yet had a payment holiday and are experiencing financial difficulty will be able to request one. In combination, these measures will serve to protect homeowners from repossession at this time.