Dáil Éireann Debate, Tuesday - 16 June 2020
141. Deputy Darren O'Rourke asked the Minister for Finance if his attention has been drawn to the fact that some banks are charging interest on so-called Covid-19 mortgage breaks and that in some cases this will run into additional thousands of euro over the lifetime of a mortgage; his views on whether this is fair; the measures he is taking to stop this; and if he will make a statement on the matter. [11617/20]
View answerI have been advised by the Central Bank of Ireland (the Central Bank) that they have been engaging closely with regulated entities on payment breaks during the pandemic period. Payment breaks are a significant support for borrowers and provide breathing space to help them address short-term liquidity constraints due to the impact of COVID-19.
A key focus has been to ensure that regulated entities act in a way that protects the best interests of borrowers and is in line with the relevant codes and regulatory requirements. A well-established and robust consumer protection framework is in place for mortgage customers in Ireland.
Through ongoing engagement with sector representatives and firms, the Central Bank are working to ensure that affected borrowers are supported through this unprecedented period of stress. To that effect, the Central Bank has published its expectations for payment breaks in credit unions, banks and other firms. These correspondences are available in full on the Central Bank’s website. The Central Bank has clearly stated that it is essential that regulated firms take a pro-active and consumer-centric approach to all issues arising from COVID-19, an approach which I fully support.
Of particular importance is ensuring that customers are provided with sufficient information to understand how the payment break operates, the impact on their loan repayments and cost of credit, and how their case will be treated when the payment break ends. The Central Bank have set out their expectation to industry that at the end of the agreed payment break, customers should be given options to repay the outstanding balance including (i) repaying the loan within the remaining term, or (ii) extending the term of the loan. This choice should apply for all loans, including mortgages, and the impact of the options on the overall cost of credit and monthly repayments should be fully explained to the customer. Customers should also be allowed to make reduced payments during the payment break where they wish to do so. This recognises that the borrower circumstances may differ. It is therefore important that borrowers are presented with the options and information to allow them to make choices which best suit their own circumstances.
Where borrowers continue to experience financial difficulties at the end of the payment break, supports are available through the existing consumer protection framework, for example, the Code of Conduct on Mortgage Arrears 2013. Due regard must be given to the fact that each case of financial difficulty is unique and needs to be considered on its own merits. The Central Bank will ensure that lenders are operationally ready and prepared to engage with borrowers during, or at expiry of, the six-month payment break in order to identify whether or not the borrower requires further support, and if so, to consider appropriate and sustainable solutions, as soon as possible.
