Gerald Nash (Louth, Labour)
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201. To ask the Minister for Finance the status of his latest meeting with individual banks; the details of his discussions with the banks on the charging of interest to customers on Covid-19 mortgage payment breaks; if he directed the banks to cease charging interest on mortgage payment breaks; and if he will make a statement on the matter. [16870/20]

Paschal Donohoe (Dublin Central, Fine Gael)
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The swift introduction, and subsequent extension to 6 months, of the payment breaks by the Banking and Payments Federation of Ireland was critical for borrowers impacted by Covid-19. The payment breaks on mortgages allow households to absorb the shock of the crisis, so that as many as possible can recover once the virus is under control.

As at the end of June, the Central Bank reported that of the almost 160,000 payment breaks approved for Irish borrowers, just over 70,000 were for mortgage holders in respect of loans worth c.€9.6 billion. Mortgages on primary dwelling houses accounted for nearly 62,500 of these.

However, these measures do not come without cost to the banking sector and these costs will also have to be managed in a way that protects their business and will be as fair as possible to the various stakeholders. As the Tánaiste, the Minister for Public Expenditure and Reform and I made clear to the CEOs of the main retail banks in meetings last week, it will not be acceptable for banks to make excess profits from borrowers on payment breaks and it will be a matter for banks to demonstrate that this situation will not arise.

The banks assured us that work is ongoing at the highest levels to ensure a smooth return to regular repayments for their customers who are currently on COVID-19 payment breaks. Customers who have difficulties returning to regular repayment at the end of the payment break will be supported with a range of options so that a manageable repayment can be agreed.

The Government and the Central Bank of Ireland have stated that it is essential that lenders fully explain the implications, including any associated cost or other significant impacts, of the particular payment break measures being put in place. For instance, lenders should outline if the repayment term of the mortgage will be extended due to the payment break, if monthly payments will increase following the resumption of the mortgage repayments, if interest will continue to accrue during the payment break and the implications this will have for the total cost of the credit, and any other significant matter for the customer when availing of a Covid-19 payment break, or indeed for any other reason.

The Central Bank has required that regulated firms have plans and the operational capability to deliver an assessment of all borrowers on payment breaks to ensure that appropriate and sustainable solutions are identified in a timely manner for those borrowers who are not able to return to paying full capital and interest at the expiry of the payment break.