Dáil debates

Wednesday, 3 March 2021

6:45 pm

Photo of Seán FlemingSeán Fleming (Laois-Offaly, Fianna Fail) | Oireachtas source

I thank the Leas-Cheann Comhairle for the opportunity to discuss banking matters here this evening. As the Minister, Deputy Donohoe, has touched on, this debate, like so many others, is now set against the backdrop of Covid-19. Covid-19 is the most significant shock the banking system has faced since the financial crash of over a decade ago. Nevertheless, the banking reforms introduced since the last crisis have helped to maintain financial stability at this difficult time. For example, over recent years, Irish banks have engaged in more prudent lending, including mortgage lending, due to influence of the Central Bank lending rules. They have downsized, are more focused on the Irish market and have more stable sources of funds. They are also more appropriately capitalised for their lending and other activities. Of course, other factors have also been significant in helping to maintain stability. These include the exceptional levels of business and income supports provided by the Government and the monetary policy adopted by the European Central Bank.

While Government supports have played an important role in helping impacted businesses and households, it was also necessary and welcome that the banking industry stepped up early and acted to provide essential support and assistance to its customers. Around this time last year, the Minister for Finance engaged with the Banking and Payments Federation of Ireland, BPFI, to ensure that these necessary supports would be put in place. In response, the BPFI announced a co-ordinated approach by their bank and other members to support customers. The range of supports included payment breaks, initially for three months but later extended to six months. The implementation of this voluntary moratorium by the banking industry in Ireland was an immediate and flexible response to the fast-emerging Covid-19 crisis.

Since then, more than 150,000 payment breaks were approved for household and SME borrowers, including more than 82,000 on mortgages, almost 36,000 for other consumer loans and 32,500 for SME loans. Therefore, a large number of borrowers received important liquidity and cash flow supports during a fast-moving and evolving public health crisis, which helped them to deal with the immediate onset of the Covid-19 crisis. It is also welcome that, as these system-wide Covid-19 payment breaks came to an end, the vast majority of borrowers have been able to resume full loan repayments. Almost 89% of primary home mortgage borrowers returned to full repayments at the end of the payment break and the vast majority of them have done so within the existing loan term. Many borrowers are still impacted by the pandemic and will continue to need help, which we expect to be provided.

Separately, it is positive to note that while the pandemic had an immediate impact on the scale of new lending, the number of approvals has picked back up significantly with the monthly levels of mortgage approvals, both in terms of the number of applications and of value, since September 2020 higher than in any comparable month since such data were first published in 2011.

The CEOs of the main retail banks have confirmed that they are continuing to process mortgage applications and mortgage drawdowns from their customers who were impacted by Covid-19 on a case-by-case basis and that they are taking a fair and balanced approach to such applications. I look forward to hearing contributions from Deputies.

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