Wednesday, 17 February 2021

Questions (179)

Róisín Shortall

Question:

179. Deputy Róisín Shortall asked the Minister for Finance if he will engage with the banks to discuss the matter of mortgage approval expiration dates given that there is a six month expiration on mortgage approvals and currently there are no in-person viewings of properties for sale; if he will request the banks to extend approval periods in cases in which there has been no change of circumstance; and if he will make a statement on the matter. [8848/21]

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Written answers (Question to Finance)

Since the COVID-19 situation first arose, I have maintained contact with the BPFI and lenders on the measures they have put in place to assist their customers who are economically impacted by the pandemic. In relation to the particular issue of new mortgage lending, the main retail banks previously confirmed that they are considering mortgage applications and mortgage drawdowns in relation to their customers who were impacted by COVID-19 on a case by case basis and that they are taking a fair and balanced approach. Lenders continue to process mortgage applications and have supports in place to assist customers impacted by COVID-19. Therefore, if mortgage applicants have any queries or concerns about the impact of COVID-19 on their mortgage application, they should in the first instance contact their lender directly on the matter.

Regarding the particular issue of extending the period of a mortgage approval in principle, the Central Bank has advised that there are no specific regulatory requirements relating to the duration of an approval in principle. That is a commercial and business matter for individual lenders. However, a lender should make the duration of any offer of approval in principle clear to a consumer, in line with the requirement of the Consumer Protection Code 2012 to provide clear information to a consumer and bring their attention to key information.

More generally there are certain consumer protection requirements which govern the provision of mortgage credit to consumers. For example, the European Union (Consumer Mortgage Credit Agreements) Regulations 2016 (CMCAR) provide that, before concluding a mortgage credit agreement, a lender must make a thorough assessment of the consumer’s creditworthiness with a view to verifying the prospect of the consumer being able to meet his or her obligations under the credit agreement. The CMCAR further provide that a lender should only make credit available to a consumer where the result of the creditworthiness assessment indicates that the consumer’s obligations resulting from the credit agreement are likely to be met in the manner required under that agreement. The assessment of creditworthiness must be carried out on the basis of information on the consumer’s income and expenses and other financial and economic circumstances which are necessary, sufficient and proportionate.

In addition, the Central Bank’s Consumer Protection Code 2012 imposes ‘Knowing the Consumer and Suitability’ requirements on lenders. Under these requirements, lenders are required to assess affordability of credit and the suitability of a product or service based on the individual circumstances of each borrower. The Code specifies that the affordability assessment must include consideration of the information gathered on the borrower’s personal circumstances and financial situation. Furthermore, where a lender refuses a mortgage application, the CMCAR requires that the lender must inform the consumer without delay of the refusal. In addition, the Code requires that the lender must clearly outline to the consumer the reasons why the credit was not approved, and provide these reasons on paper if requested.