ROYAL Bank of Scotland is supporting one in five of its home loan customers with three month delays in payments - as the nation's economy is hit by the coronavirus pandemic.
RBS has confirmed that 200,000 of its 1m mortgage customers across the UK have so far been approved for mortgage repayment holidays.
Customers affected have been emailed to let them know that they will benefit from the full three month offering which will run from May to July.
Latest figures from UK Finance show across the banking industry, 1.82 million mortgage payment holidays have been issued as of May 20 – equivalent to one in six mortgages.
It comes as the partly taxpayer-owned Edinburgh-based bank set aside £802 million to pay for potential losses related to coronvirus as customers struggle to cope with loan repayments.
Operating profits at the bank, still majority owned by the taxpayer after being bailed out in the financial crisis, halved to £519m in the first quarter of the year compared with the same period a year earlier as a result.
While banks in general have been criticised over the amount of lending they have done through the Chancellor's coronavirus business interruption loans scheme (CBILS), RBS appears to have been punching above its weight relatively, having approved £2.4 billion, or more than 11,000 loans.
That is around 10% of the total CBILS approved loans so far.
The chief financial officer, Katie Murray, has said that while CBILS would not be hugely profitable for the lender she expected a “nominal return” from the loans.
It has also provided 86,490 customers with £2.7bm through the Bounce Back Loan Scheme in the three weeks since its launch although one in five have not been been approved.
RBS, which is changing its parent name to NatWest this year, says it has removed late credit card payment fees.
And it has frozen interest rates on overdrafts at current levels while removing all fees until at least the end of June.
A Royal Bank of Scotland spokesman said: “We’re committed to supporting our customers through this unprecedented crisis, and it’s why we’ve introduced a range of measures including mortgage, credit card and loan payment holidays and have proactively spoken to over 230,000 customers who are elderly, vulnerable or in long term isolation. We’re continually reviewing the support we offer to ensure that we meet people’s needs."
The banking association, UK Finance has said that for customers that have already taken a payment holiday on their mortgage, it "may be appropriate in some circumstances" for this to be extended.
The range of support available to customers unable to meet their normal repayments include reduced payments, a move to interest only payments for a period, extending the term of the mortgage to reduce payments, taking a payment holiday if the customer has not already done so or a further extension of the payment holiday, depending on the borrower’s circumstances.
Stephen Jones, UK Finance chief executive said: “Mortgage lenders are committed to providing those borrowers nearing the end of their three-month payment holiday with help and flexibility in choosing the next steps which best suit their needs. The industry looks forward to regulatory guidance being finalised swiftly to ensure both borrowers and lenders can plan over the coming weeks. Meanwhile those borrowers who have already taken a mortgage payment holiday and can afford to make payments are encouraged to do so, as this will reduce the level of their repayments in the long run.
“For those borrowers who have not already applied for a mortgage payment holiday, the industry supports the extension of the availability of payment holidays until October 31, 2020 as this will provide much-needed breathing space for borrowers who need it. Lenders are also committed to the moratorium on involuntary repossessions to ensure no homeowner loses the roof over their head because of Covid-19 related repayment difficulties.
“A payment holiday may not be the right choice for everyone, and borrowers should only apply if they need one. We would encourage any borrowers concerned about their financial situation to check with their lender, starting by looking at their website which will have the latest information on the support available.”
Lenders are also providing almost 700,000 payment holidays on credit cards and 470,000 on personal loans for customers facing cash-flow problems due to the coronavirus.
Over 27 million customers have been offered the option of interest-free borrowing for three months on the first £500 of their arranged overdraft.
The figures for up to the end of April comes as part of a broad package of measures from the industry to support customers affected by the Covid-19 outbreak.
Lenders have worked with the Financial Conduct Authority (FCA) to help people facing temporary financial pressures due to the Covid-19 outbreak by providing a payment freeze on credit cards and personal loans of up to three months, and offering customers the option of interest-free borrowing on the first £500 of their overdrafts.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules here