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Mortgage Lending

Dáil Éireann Debate, Thursday - 16 July 2020

Thursday, 16 July 2020

Ceisteanna (65)

Richard Boyd Barrett

Ceist:

65. Deputy Richard Boyd Barrett asked the Minister for Finance the actions he will take to prevent the practice of the banks to not let persons who are in receipt of the temporary wage subsidy scheme draw down already agreed mortgages; and if he will make a statement on the matter. [16317/20]

Amharc ar fhreagra

Freagraí scríofa

I 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 (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 FAQ 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, as set out below, the decision to grant or refuse an individual application for mortgage credit, or temporarily suspend a mortgage approval in principle, 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. Furthermore, a loan offer may contain a condition that would allow the lender to withdraw or vary the offer if in the lender’s opinion there is any material change in circumstances prior to drawdown and, in such cases, the decision to withdraw or vary the offer is also a commercial decision for the lender.

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. 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 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. 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.

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