Written answers

Wednesday, 27 May 2020

Department of Foreign Affairs and Trade

Banking Sector

Photo of Richard Boyd BarrettRichard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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66. To ask the Minister for Finance the measures he will take to ensure that banks which offered term extensions to loans, including mortgages, will not add penalties or recapitalisation or accruals but will resume the exact same repayments pre-Covid-19; and if he will make a statement on the matter. [7665/20]

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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As the Deputy will be aware, An Taoiseach, Leo Varadkar T.D. and I, along with the Minister for Business, Enterprise & Innovation, Heather Humphreys T.D., met with the Chief Executives of the five Irish major retail banks earlier this month.

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. Last month, 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.

The Central Bank is focused on ensuring that extensions to COVID-19 related payment breaks operate in borrowers’ best interests and in line with regulatory requirements. Payment breaks give customers the opportunity to postpone or reduce their repayments on their mortgage, personal or business loans, providing breathing space for borrowers from the severe income shock many households and businesses are experiencing.

The Central Bank has clearly communicated and agreed with the BPFI that it expects that at the end of the agreed payment break that borrowers who can return to full repayments be given, at the minimum, the option to either repay the loan within the remaining term or extend the term of the loan, without penalties noting that borrower circumstances and the appropriateness of each option may differ. These options may result in an increase in monthly repayments due to the overall increase in the cost of credit and this should be fully explained to the borrower. Consumers can also find more information on payment breaks at the Central Bank’s Covid – 19 Hub.

Photo of Catherine MurphyCatherine Murphy (Kildare North, Social Democrats)
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67. To ask the Minister for Finance the communication there has been with a bank (details supplied); when it will be possible to recommence valuations; and if he will make a statement on the matter. [7666/20]

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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I have not had any communication with the bank referred to by the Deputy in relation to the carrying out of property valuations.

It should be noted that the European Union (Consumer Mortgage Credit Agreements) Regulations 2016 (SI 142 of 2016) places certain requirements on mortgage lenders in relation to the standards of, and used by, property appraisers when carrying out a property valuation for mortgage lending purposes. For example, lenders are required that to ensure that appraisers conducting property valuations are professionally competent, use reliable standards and are sufficiently independent from the credit underwriting process so that they can provide an impartial and objective valuations.

Within this overall financial services legal requirement in relation to property valuation for mortgage lending purposes, it can also be noted that the Regulations which set out the temporary Covid-19 public health restrictions (SI 121 of 2020) recognise that financial, insurance and banking services provided by a financial services provider is an essential service, and that such services which are necessary to support any other essential service, including the provision of key third party supports provided under contract to a person providing an essential service, also constitutes an essential service.

The Government has now published a roadmap for the re-opening of society and business, with phase one now in operation. In relation to the roll out of the further phases and the resumption of further economic activity, the Government will keep all relevant issues under continuous review and when it makes it further decisions it will have full regard to the public health advice and also have regard to other important social and economic considerations.

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