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Covid-19 Pandemic

Dáil Éireann Debate, Thursday - 15 October 2020

Thursday, 15 October 2020

Ceisteanna (125)

Neale Richmond

Ceist:

125. Deputy Neale Richmond asked the Minister for Finance if in his engagement with the banks regarding payment breaks, the issue of borrows repaying interest only was raised; his views on the merit to the proposition; and if he will make a statement on the matter. [30787/20]

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Freagraí scríofa

On 18 March last, the Banking and Payments Federation of Ireland (BPFI) announced a coordinated approach by banks and other lenders to help their customers who were economically impacted by the Covid-19 crisis. The measures included flexible loan repayment arrangements where needed, including loan payment breaks initially for a period up to three months and then subsequently extended for up to six months. This was a welcome initiative and it allowed important and necessary cash flow relief to be quickly and efficiently provided to borrowers. However, the other aspects of a loan agreement, including the issue of interest accrual during the period of the payment break, remained a commercial matter for the parties to a loan agreement.

Banks have now provided for flexible options for borrowers who can recommence payments following a Covid-19 payment break, and the BPFI has produced a useful guide on this - https://www.bpfi.ie/wp-content/uploads/2020/09/Final-BPFI-Coming-off-the-COVID-19-Payment-Break.pdf. The Central Bank has also updated its Covid-19 FAQ in relation to mortgage payment breaks on 18 September.

However, I am very conscious that many other borrowers continue to be impacted by the economic consequences of Covid-19, and that they may not be in a position to resume their loan repayment commitments when their payment break ends. I am fully aware of the stress and uncertainty that these borrowers are still facing, and they will continue need assistance and support from their lenders.

At our meeting on 28 September, this point was made very clear to the CEOs of the country’s retail banks, and to the BPFI, by the Tánaiste, the Minister for Public Expenditure and Reform and myself. It was also indicated that it is particularly vital that lenders work with their customers to ensure that suitable arrangements are put in place to assist their customers who are still experiencing difficulty. Borrowers have a suite of regulatory protections and lenders have specific obligations to support and work with borrowers still experiencing mortgage or other loan difficulty because of Covid-19. These options could include additional flexibility, and this could be short term such as additional periods without payments or interest-only repayments, or if appropriate more long term arrangements. Each individual’s position is different and that’s why a case-by-case approach is now the best approach as some sectors of the economy are more impacted than others.

I will also continue to work with the Central Bank, as regulator, to ensure that the Central Bank consumer protection framework will be fully available to mortgage and other borrowers that will still need support following a Covid-19 payment break.

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