Réada Cronin (Kildare North, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

43. To ask the Minister for Finance his plans to introduce mortgage and rental payment breaks for those in receipt of the pandemic unemployment payment and employment wage subsidy schemes; the way such breaks would not affect their credit rating now and into the future; and if he will make a statement on the matter. [4584/21]

Claire Kerrane (Roscommon-Galway, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

53. To ask the Minister for Finance if he will request the banks and all financial institutions to introduce mortgage breaks without additional interest for mortgage holders in order to support them in the midst of these most serious level 5 Covid-19 restrictions; and if he will make a statement on the matter. [4843/21]

Paschal Donohoe (Dublin Central, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I propose to take Questions Nos. 43 and 53 together.

On 18 March last the Banking and Payments Federation of Ireland (BPFI) announced a coordinated approach by banks and other lenders to help their customers who were economically impacted by the COVID-19 crisis. The measures included flexible loan repayment arrangements where needed, including loan payment breaks initially for a period up to three months and then subsequently extended for up to six months. The implementation of this voluntary moratorium by the banking industry was a flexible response to the emerging COVID-19 crisis and ensured that a large volume of affected customers could benefit quickly during a fast moving and evolving public health crisis.

While many borrowers whose payment break has ended have been able to return to full payments, it is also recognised that many borrowers continue to be impacted by the economic consequences of COVID-19 and they may not be in a position to resume their loan repayment commitments when their payment break ends or may now be in difficulty for the first time. Regarding the issue of residential rental payment breaks, that is a matter which falls within the policy remit of my colleague the Minister for Housing, Local Government and Heritage.

First, regarding the offering of further payment breaks, the Deputy should be aware that the Central Bank has confirmed that there is no regulatory impediment to lenders offering payment breaks to borrowers, providing they are appropriate for the individual borrower circumstance. The BPFI has also reiterated this month that standard payment breaks continue to be part of the wide range of tailored solutions which are being made available to customers upon assessment of their situation.

In relation to the accrual of interest on loans during payment breaks, it is noted that lenders will continue to incur costs (both in respect of funding and enhanced operational requirements) and that other borrowers will continue to be liable for their interest charges. Payment break 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. From the outset, it has been made clear to banks that it will not be acceptable for them to make excess profits on payment breaks and that it will be a matter for them to demonstrate that such a situation will not arise.

Borrowers have a suite of regulatory protections, such as the Central Bank's Code of Conduct on Mortgage Arrears and the Consumer Protection Code, and lenders have specific obligations to support and work with borrowers who are continuing to experience loan difficulty because of COVID-19. The options could include additional flexibility, and this could be a short term arrangement such as additional periods without payments or interest-only repayments, or if appropriate more long term arrangements.

Regarding the Central Credit Register (CCR), it is important to note that the CCR does not produce credit ratings, rather its purpose is to provide factual information to lenders and borrowers on a borrower’s credit record. The Central Bank has also advised lenders that in their reporting to the CCR, they will need to apply judgement around whether a restructure has been agreed in response to an identification of financial distress and should be reported as such.

Through ongoing engagement with the BPFI and lenders, the Central Bank is working to ensure that borrowers affected by COVID-19 continue to be supported through this period of unprecedented stress. The Central Bank recently wrote to all lenders indicating that lenders are to ensure that they have sufficient expert resources to assess individual borrower circumstances, and to offer appropriate and sustainable solutions to affected borrowers in a timely manner in line with regulatory requirements and Central Bank expectations.

I will continue to work with the Central Bank, as regulator, to ensure that the Central Bank consumer protection and other applicable frameworks will be fully available to all borrowers that will still need support. Regarding the issue of residential rental payment breaks, that is a policy matter which falls within the remit of my colleague the Minister for Housing, Local Government and Heritage.