The big story at the end of this week was undoubtedly the decision by the UK bank regulator, the FCA, to extend the mortgage payment holiday period out by a further three months to the end of October.
This of course will be a huge relief to many banks, who whilst having seen volumes of customers in arrears drop the last few months (as people have used the various schemes), are expecting a huge increase once they end.
At the moment there are 1.8m mortgage customers in this situation, and this delay simply gives them more time to prepare.
For many customers, of course, interest is still being charged albeit not being currently paid. So the flip side of this announcement is a larger bill with higher monthly payments each month, will be due at the end of all this.
With more difficult economic news, this week, it is easy to see a situation where an increasing number of customers will now have more difficulty making payments.
And… the more this proverbial can is kicked down the road, the bigger the interest accrued and the bigger this problem could become. These things take time to evolve, but watch this space, it is likely going to get bumpy.
We have been discussing this scenario, for what seems like months now at work… the plans to help manage this….some tactical, some long term.
Fundamentally data is key. With this delay we do now have more time to gather new data, analyze the data we have, and get any (digital) infrastructure properly setup. The wave of change is going to be bigger, the risk higher – we have been given more notice and time to get ready to help. Now is the time on this.
In other news, there is also still discussion of negative interest rates in the UK rumbling around. This would be a first in the UK, and anyone with cash savings would be essentially paying to keep their money in the bank. This would be a seismic event. Although it may further reduce mortgage rates, this could be seen as another example of can-kicking. This is not to mention system impacts… I mean do we have confidence all the myriad of calculations in financial services work as well with a negative number?… this would keep me awake at night!
Lastly, the more fundamental changes in the workplace continue to appear to be moving with increasing pace.
- There was this story regarding changes at the NHS, not known for being the most technically progressing, but being able to move forward :).
- I also heard two instances of companies this week now reviewing their real estate strategies. Homeworking and flexible working is undoubtedly going to become more common and important going forward… (and secretly I think many of us, who are able to have the right set up at home (I would importantly qualify), are enjoying it too)!
Have a good weekend everyone…. @chris_w_tweet
