Dear Member of Parliament,
I wanted to give you an update on the banking and finance sector’s response to the Covid-19 crisis. I know that of particular importance to you and your constituents is delivery of the Coronavirus Business Interruption Loan (CBIL) scheme, mortgage payment holidays and the package of measures on overdrafts, credit cards and instalment loans announced last week by the Financial Conduct Authority (FCA).
First, though, I would like to thank the Chancellor of the Exchequer for praising, during yesterday’s daily Covid-19 briefing, the efforts of the many key workers across the banking and finance sector who are maintaining frontline services in branches and call centres. These workers are dealing with an unprecedented volume of enquiries from business and retail customers, and we owe them our gratitude.
Coronavirus Business Interruption Loan scheme
UK Finance has published the latest data on CBIL lending this morning.1 These show that the banking and finance sector has lent over £1.1 billion to SMEs through the CBIL scheme as of 13 April. Total lending under the scheme has grown by £700 million in the last week, an increase of 150 per cent.
6,020 loans have now been provided through the scheme, more than double the number that had been provided one week ago. The number of loans approved each day continues to rise, increasing from 240 on 2 April to 910 on 8 April, with a further 1,800 loans worth over £300 million recorded over the bank holiday weekend.
Total lending under the scheme has increased rapidly from £453 million on 6 April to £1.115 billion just a week later, while the average value of a CBIL has grown to over £185,000.
Lenders have received 28,460 formal applications to the scheme from businesses. Over 6,000 of these applications have been approved already, while others are still being processed and are expected to be approved over the coming days.
Staff in branches and call centres are working tirelessly to provide businesses with finance to help them get through the current economic challenges. All lenders are looking to provide
Mortgage payment holidays
Figures compiled and published by UK Finance yesterday show that lenders provided over 1.2 million mortgage payment holidays by 8 April to households whose finances have been impacted by Covid-19.2
The action taken by lenders in the three weeks since they announced on 17 March that they would support customers facing financial difficulties due to the crisis, means that one in nine mortgages in the UK is now subject to a payment holiday, helping households across the country through this difficult time. For the average mortgage holder, the payment holiday amounts to £260 per month of suspended interest payments, with many benefiting from the option of extending the scheme for up to three months.
The number of mortgage holidays in place more than trebled in the two weeks between 25 March and 8 April, growing from 392,130 to 1,240,680. This is an increase of nearly 850,000, an average of around 61,000 payment holidays being granted by lenders each day.
FCA measures
We welcome the package of targeted temporary measures concerning overdrafts, credit cards and instalment loans announced by the FCA on 9 April.3 This followed detailed discussions with the banking and finance industry about how best to adopt a common approach to supporting customers during the Covid-19 crisis.
The FCA hopes that these measures will give firms the flexibility under its rules to provide temporary financial relief to those facing payment difficulties in respect of loans, credit cards and overdrafts.
UK Finance will send regular updates detailing the levels of CBIL lending and payment holidays for mortgages and forms of unsecured lending to keep you informed of the efforts the sector is making to support your constituents.
Kind regards,
Stephen Jones
CEO