Dáil Éireann Debate, Thursday - 16 July 2020
22. Deputy Pearse Doherty asked the Minister for Finance if he has communicated with retail banks regarding the treatment of mortgage applications. including joint applications, whereby such applications are rejected or approvals in principle withdrawn in cases in which one or both applicants are in receipt of payments through the temporary wage subsidy scheme despite no reduction in pay or hours; and if he will make a statement on the matter. [16298/20]
Amharc ar fhreagraI fully appreciate the concerns many people are experiencing about mortgage applications and drawdowns at this difficult time, and my Department is maintaining close contact with the Central Bank and Banking and Payments Federation Ireland – the BPFI - as the lending industry works to address the difficulties the Covid-19 situation is causing for both borrowers and lenders. In this context, the Central Bank has advised that it expects all regulated firms to take a consumer-focused approach and to act in their customer's best interests at all times, including during the Covid-19 pandemic.
In the context of mortgage applications, lenders continue to process applications and have supports in place to assist customers impacted by COVID-19. The BPFI has published a Covid-19 support information document which customers can consult, or customers can contact their lender directly, if they have any queries or concerns about the impact of COVID-19 on their mortgage application. However, within the parameters of the regulatory framework governing the provision of mortgages, the decision to grant or refuse an individual application for mortgage credit, is a commercial and contractual decision to be made by the regulated entity and it is not appropriate or possible for me to instruct lenders in that regard.
Regarding the regulations governing mortgage credit, the European Union (Consumer Mortgage Credit Agreements) Regulations 2016, which transposed the Mortgage Credit Directive into Irish law, require lenders to make a thorough assessment of the consumer’s creditworthiness. The assessment must take appropriate account of factors relevant to verifying the prospect of the consumer being able to meet his or her obligations under the credit agreement and must be carried out on the basis of information on the consumer’s income and expenses and other financial and economic circumstances which is necessary, sufficient and proportionate. The Regulations 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. 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 and in this regard I welcome the recent statement from the pillar banks that they will assess mortgage applications from people in receipt of the temporary wage subsidy scheme on a case by case basis.
