Wednesday, 20 May 2020
Department of Finance
119. To ask the Minister for Finance if all mortgage holders and business customers of the banks availing of a payment break as a result of Covid-19 will have the option of having the term of their loan extended in order that they do not face a rise in monthly repayments when they resume paying in view of the announcement of 11 May 2020 (details supplied); and if he will make a statement on the matter. [6664/20]
126. To ask the Minister for Finance if the banks have now agreed that anyone availing of the Covid-19 break in loan or mortgage payments can now extend the loan term in order that their repayments are no higher; and if he will make a statement on the matter. [6817/20]
I propose to take Questions Nos. 119 and 126 together.
As the Deputy will be aware, An Taoiseach, Leo Varadkar and I, along with the Minister for Business, Enterprise & Innovation, met with the Chief Executives of the five Irish major retail banks last week.
The Taoiseach emphasised the important role of the banking sector in supporting the gradual re-opening of the Irish economy by ensuring a flow of credit to businesses as they begin to trade again, in line with the government’s Roadmap for Re-opening Society and Business.
We welcomed the ongoing work of the banks in helping business customers and mortgage customers impacted by COVID-19 which included the initial three month payment-breaks that allowed households and businesses to defer some of their most significant outgoings. On 30 April, the members of the Banking and Payments Federation Ireland (BPFI) announced their intention to extend these payment breaks to six months for households and businesses which require it.
Business and mortgage customers will have the option of having the term of their loan extended so they do not face a rise in monthly repayments when they resume paying. Importantly, it will not affect customers’ credit rating, nor increase the burden on non-performing loans on the banks.
The Central Bank is focused on ensuring that extensions to COVID-19 related payment breaks operate in borrowers’ best interests and it has communicated its expectations to the BPFI that at the end of the agreed payment break, borrowers should be given the option to either:
i. repay the loan within the remaining term or
ii. extend the term of the loan.
This choice should apply for all loans and the impact of both options on the overall cost of credit and monthly repayments should be fully explained to the customer, noting that borrower circumstances and the appropriateness of each option will differ.
As part of their supervisory work, the Central Bank will monitor compliance with this expectation and take action, where their expectations are not met.