14:56 PM, 30th March 2020, About A year ago 1
Contrary to the FT front-page headline “Banks seek to freeze property market as credit and virus fears hinder moves” (March 27), banks have not been pressurising the government to freeze the housing market. However there is no doubt that with the land registries in Scotland and Northern Ireland currently closed and valuations and viewings unable to take place, there is considerable friction in the market.
Government guidance published on March 26 makes clear that buyers and renters “should, so far as possible, delay moving home while emergency measures are put in place to fight coronavirus”. We all recognise the significant stress and uncertainty that Covid-19 has created for home movers and so mortgage lenders have agreed to provide those customers who have exchanged contracts the option to extend their mortgage offer for up to three months to enable them to move at a later date.
In these challenging times, the banking and finance industry is committed to doing all it can to support its customers and the wider economy as quickly and comprehensively as possible. Colleagues across every bank and building society are working tirelessly to help and support their customers, particularly the most vulnerable. For personal customers that includes providing the option of a mortgage payment holiday of up to three months, agreeing a moratorium on any residential and buy-to-let repossessions, and increasing the contactless card spending limit to £45, with individual firms helping customers with extended or automatic overdrafts and firms now considering support for other unsecured debt.
For the many small and medium-sized businesses that are seeing their cash flows severely disrupted by Covid-19, the banking and finance industry is seeking to make the Coronavirus Business Interruption Loan Scheme (CBILS) a success. It is a requirement of the scheme that for loans above £250,000 lenders must take security over available assets, with the government’s 80 per cent guarantee covering those residual losses remaining after any recoveries. For loans up to £250,000 approved lenders and the scheme are required to apply their normal lending criteria: many have decided not to seek personal security from SME owners for loans up to this threshold.
Banks are also required to assess with the business whether it would be eligible for a loan on normal terms before they can consider if it could be provided with funding under CBILS. Your report “No 10 presses banks to relax bailout loan conditions” (March 27) suggests that Downing Street has “reprimanded banks attaching stringent conditions” to CBILS schemes, but it is the terms of CBILS itself that determine how much security is taken for larger loans, and many lenders require no security for smaller amounts. Banks have not been and should not be reprimanded for adhering to the terms that government itself has attached to CBILS.
Everyone in the banking and finance industry is working hard to help the UK through the Covid-19 pandemic. I look forward to more balanced coverage from your paper in the future.
Chief Executive, UK Finance
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