Natwest and RBS: Mortgage holiday and savings support options amid coronavirus outbreak

Coronavirus has hit the UK, with 319 people having tested positive for the COVID-19 as of 9am on March 9, 2020, Public Health England said. With many fearing they may be infected by the outbreak, some people may wonder what it could mean for their personal finances.

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Amid the outbreak, some banks have revealed they are offering measures to support customers affected by the outbreak.

This includes NatWest and Royal Bank of Scotland, which are both retail banking subidaries of The Royal Bank of Scotland Group plc.

As part of standard forbearance options for customers in financial difficulty, not just those affected by coronavirus, the bank offers some customers the ability to defer mortgage and loan repayments for up to three months.

Additionally, customers may be able to close fixed savings accounts to access cash, without facing early closure charges.

An RBS spokesperson said: “We are monitoring the potential impact of Coronavirus across all our customers to ensure we can support them appropriately through any period of disruption.

“We have a strong track record in working with our customers who are affected by disruption outside of their control.

“We understand that there may be circumstances where a personal customer may fall into financial difficulty as a result of the impacts of Coronavirus, for instance, loss of income.

“We will look to understand each customer’s situation on a case-by-case basis and can offer a number of options to help them manage their finances.

“We would encourage any customer experiencing financial difficulty to get in touch with us.”

The banking giant explained it has a range of standard forbearance options to assist all customers in financial difficulty, regardless of root cause.

However, the measures aren’t blanket provisions, with them being reserved for customers in financial difficulty.

Individual customer circumstances will be considered and options matched on a case-by-case basis.

The bank highlighted options, such as:

  • Mortgage and loan repayment deferral for up to three months
  • Customers can close fixed savings accounts to access cash with no early closure charge
  • Refunds on credit card cash advance fees
  • Customers can apply for increased temporary credit card limit
  • Customers can request an increased cash withdrawal limit of up to £500 (debit card).

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Today, Italy suspended mortgage payments across the country, due to the coronavirus outbreak.

Commenting on the possibility on whether the UK will do the same in the coming weeks, Martijn van der Heijden, Chief Strategy Officer at online mortgage company Habito said: “Italy has announced this morning a suspension on all mortgage payments across the country as it battles with the continued spread of Covid-19.

“Last week the financial trade body UK Finance said that here, banks, building societies, and credit card providers would show understanding to customers for those who contract the virus, while RBS has announced it would offer a three month mortgage holiday for those customers affected by the outbreak.

“Right now, it’s fairly commonplace for repayment holidays to be offered to customers who need help with their mortgage, so we expect to see more lender’s reminding customers of this facility if they are eligible.

“However, not all lenders offer repayment holidays and it’s likely that it won’t be offered to everyone – for example, those already in arrears, or who have bad credit – unless the Government mandates it.

“So, questions will now be asked if the UK could do the same as Italy for all households with a mortgage in the coming weeks of the pandemic.

“While total homeownership rates in Italy are at roughly similar levels to the UK, many more people in Italy own their home outright. Here, we have a much higher proportion of homes that are mortgaged (about 30 percent compared to Italy’s 15 percent) so the Government will have to weigh up all the implications of letting the nine million outstanding residential mortgages, worth a collective £1,486 billion, take a repayment holiday that could last months.

“It also raises questions for the millions of people who rent. On average, those with a mortgage spend 18 percent of their household income on mortgage payments, whereas rent payments are 33 percent of household income for private renters.

“If there’s a mortgage payment holiday for the estimated 200,000 buy-to-let landlords in the private rented sector – would those savings be passed on to their tenants?”

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