Mortgages: Coronavirus

Treasury written question – answered on 7th September 2020.

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Photo of Clive Efford Clive Efford Labour, Eltham

To ask the Chancellor of the Exchequer, what steps he is taking to ensure that the credit ratings of homeowners who have taken mortgage holidays during the covid-19 outbreak are not negatively affected.

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

On 20 March, the Financial Conduct Authority (FCA) published guidance on what it expects mortgage lenders to do for consumers facing financial difficulties as a result of COVID-19.

As part of this guidance, the FCA requires that the arrears status on credit files should be masked to minimise the negative impacts that consumers might otherwise experience from taking a payment holiday. This was reconfirmed in the FCA’s updated guidance published on 2 June and continues to be the case for any borrower taking a payment holiday until 31 October 2020.

When considering new loan or credit applications, lenders will look at a range of factors, not just a borrower’s credit file. This could include a customer’s income and future ability to make repayments, which may have been affected by COVID-19.

Officials continue to have discussions with the FCA and credit reference agencies on these matters.

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