Written answers

Thursday, 30 July 2020

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
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368. To ask the Minister for Finance if he is satisfied that all customers of lending institutions that availed of a Covid-19 related break in their payments are subsequently being treated in accordance with best practice in view of the existence of numerous incidences in which serious penalties have been imposed costing the borrower up to 20% extra; if doubt has been expressed by the lenders as to whether they can facilitate the borrower that is willing to forgo the repayment holiday on foot of upfront cash payment with the response from the lenders that it may not be possible; and if he will make a statement on the matter. [21056/20]

Photo of Paschal DonohoePaschal 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.

The Central Bank of Ireland set out its supervisory expectations for Covid-19 payment breaks in a Dear cEO letter on 8 June 2020.  These expectations, which apply to both banks and non-banks, state 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.

With regard to the matters raised by the Deputy in relation to penalties or lenders being unable accept upfront cash payment to forgo the repayment break, I am unable to comment in the absence of specific details. 

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