Banks and building societies also warned off charging fees for mortgage holidays as customers spend hours trying to contact lenders

The City regulator has told banks and building societies that they must not repossess people’s homes during the coronavirus crisis, and cannot charge fees for payment holidays granted as a result of the pandemic.

The message came as mortgage holders reported waiting for hours to get through to banks to ask for help.

In guidance to lenders, the FCA said: “Firms should not commence or continue repossession proceedings against customers at this time, given the unprecedented uncertainty and upheaval they face, and government advice on social distancing and self-isolation.

“This applies irrespective of the stage that repossession proceedings have reached and to any step taken in pursuit of repossession. Where a possession order has already been obtained, firms should refrain from enforcing it.”

The FCA said lenders should offer three-month payment holidays to struggling buyers, and were not expected to investigate customers’ circumstances before saying yes. They said banks could continue to charge interest but were not allowed to levy any other fees.

Twitter has been deluged with complaints from customers unable to speak to someone at their bank. Some claimed they were waiting for as long as three and a half hours. Many expressed their anger at the lack of a simple online form that could be used to request a payment holiday.

@mrsoundman70 said: ‘Lloyds Bank. I know it’s a difficult time at the moment but I was kept on hold for 98 minutes trying to speak to someone. I am self employed with no work until the unforeseen future who is trying to contact someone regarding a mortgage holiday. I need to look after my family.’

At NatWest, one customer, @northamptonesco, said she had been kept “on hold for 3.5 hours” to speak about a mortgage holiday. Many callers are deeply frustrated about the lack of an online facility to request a mortgage holiday.

@LauraGR08339330 said: ‘2 hours on hold. I understand how extreme this situation is but please release an online form we can fill in. Save everyone a lot of hassle Or a link in our self service accounts so we can tick a mortgage holiday box. Automated message says 90 minutes wait.’

The social media teams at the banks told customers times had widened out considerably.

UK banks set out details of Covid-19 mortgage holidays Read more

On Thursday afternoon, NatWest told customers on Twitter that “the team are extremely busy at the moment but are working through calls as quickly and efficiently as possible.”

Asked by the Guardian if there was an alternative for customers who needed to apply for a payment holiday, a NatWest spokeswoman said: “You are required at this point in time to make a call to the bank to discuss your options for a mortgage holiday.” But she added the bank was urgently exploring other ways for customers to interact with it.

Lloyds said in a statement: “We’re getting a much higher number of calls from customers than normal and we’re doing our best to help as quickly as possible.” But despite comments from Twitter users, it said customers can apply online for a payment holiday.

Barclays said many mortgage holders will have to call to discuss arrangements and cautioned about automatically thinking a payment holiday is the right choice. It said some customers will be better advised to switch their repayment mortgage to an interest-only mortgage, which can result in a dramatic cut in monthly costs. But it said a switch to interest-only would only last 12 months at the most.

Nationwide, Britain’s second-biggest mortgage lender, said customers can apply and obtain a payment holiday entirely online.

Some customers have successfully got through and arranged their mortgage payment holiday. On Twitter, @mattdechine was more upbeat than others. “Managed to sort out the mortgage payment holiday for three months. Felt so anxious doing it and has made things all the more real. The adviser at Lloyds Bank was excellent. Took a while to get through (over an hour) but worth it. We’ll get through this.”

It is important to note that not everyone who contacts their lender will be granted a payment holiday. Any unpaid interest will still need to be paid back, although credit ratings should not be affected.

It is likely the lender will spread outstanding payments out over the remaining term of your mortgage so borrowers will see an increase in their monthly mortgage payments.

Sign up to the daily Business Today email or follow Guardian Business on Twitter at @BusinessDesk

For example, someone with a £200,000 mortgage over 25 years at 2.6% interest who requests a three-month payment holiday will see their repayments increase from £907 a month to £920 for the rest of the term, assuming they’ve been paying for two years.

There is a useful mortgage payment holiday calculator at this site.

It may be possible that some lenders will consider increasing the remaining term of a mortgage, which will have the effect of keeping repayments the same.