The FCA have confirmed that they will offer a second round of mortgage payment holidays, if a second wave of coronavirus and lockdown emerges.

Around 1.8 million households used a mortgage payment holiday for three months from the start of the lockdown period, as a way of offsetting any financial uncertainty or loss of income due to unemployment.

In total, around 20% of the UK’s population benefitted from the mortgage holiday scheme which also included other financial products including personal loans, credit cards, car finance and an interest-free overdraft facility.

The Financial Conduct Authority’s interim chief executive, Christopher Woolard confirmed:

“Clearly, if there are further restrictions that need to be placed for health reasons; if the situation becomes more complicated in some way, then we’ll have to think about how we adjust to those circumstances,” Woolard said during the regulator’s Inside FCA podcast.

However, Woolard expressed that he believed half of those people who used the initial mortgage payment holiday were now able to pay.

“About half of that group are people who perhaps thought they were going to lose a job or have some other kind of impact, and in fact they’re in a position where they could still afford to pay now that that ninety-day period is coming to an end,”

Woolard emphasised that while lenders suffered the burden in the short-term, borrowers will feel the effects when it catches up in the longer term through extended mortgages and rolled-up interest.

“It’s everyone’s best interest to actually get back towards payment wherever that is possible or even partial payment, but we have to recognise that there’s an ongoing situation here,” he said.

Dan Kettle of specialist finance provider OctagonCapital commented: “Taking mortgage payment holidays might seem like a healthy way to keep your finances in track and it certainly plays an important role for a lot of homeowners. However, you may look to remortgage at some point or maybe even apply for a new mortgage altogether if you plan to move home soon.

“With mortgage providers only getting stricter with their criteria, you probably don’t want to have any payment holidays on your credit report, so if your job and income is stable, you should ideally try keep up with payments and avoid holidays if you can.”