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Mortgage breaks will not be extended beyond this week

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The mortgage repayment breaks introduced in response to the Covid-19 pandemic will not be extended beyond the end of this month and the banks will instead deal with distressed borrowers on a case-by-case basis, the Government has said.

Tánaiste Leo Varadkar, Minister for Finance Paschal Donohoe, and Minister for Public Expenditure Michael McGrath held a virtual meeting on Monday with the CEOs of the country’s retail banks as well as lobbyists the Banking and Payments Federation Ireland.

The mortgage breaks, introduced in March, were initially offered on a three month basis, but were later extended to six months.

Options

Originally, some 86,000 homeowners availed of the breaks, but by late August about half had returned to normal repayment procedures, with about 43,000 still availing of the relief. The breaks are due to come to an end on September 30th.

Monday’s meeting discussed payment breaks, options for borrowers post payment breaks and overall credit and lending in the economy.

Afterwards, the Government said it had underscored the importance of protecting borrowers and offering solutions on a case-by-case basis to customers who are currently on Covid-19 payment breaks.

It said the banks will ensure that customers who have difficulties at the end of the payment break will be supported with a range of options so that a suitable arrangement can be agreed.

“The recession caused by the pandemic is like no other,” said Mr Varadkar. “Nobody is to blame for being unable to pay because their job is gone or business is closed. It’s in everyone’s interest that people and firms are given more time to get back on their feet.

“We want to make sure that Covid results in a lost year of economic activity not a lost a decade and that means forbearance and loan restructuring where appropriate.

“For this reason the banks must continue to offer payment breaks to individuals and business that still need them.

“Following on from today, the banks agreed that this would be done on a case by case basis with other options also being made available; reduced payments and interest-only, for example.

Lenders

“Anyone who is struggling should contact their bank and we expect that arrangements will be made based on each individual’s circumstances. Banks must be understanding of people’s needs at this really difficult time.”

Mr Varadkar insisted there would be “no cliff-edge coming” on September 30th. “This is merely the last day on which people and firms can apply for a Covid-related payment break if they don’t have one already,” he added.

Mr Donohoe said it was “vital” that lenders work with borrowers to ensure suitable arrangements are put in place for borrowers who are currently on payment breaks.

“Payment breaks provided temporary relief and breathing space to borrowers,” he said. “It is essential that borrowers and lenders discuss all options to ensure sustainable outcomes, on a case by case basis.”

Mr McGrath said borrowers should have access to a “full suite of measures” to alleviate any difficulties they may still be facing including a further payment break where that is appropriate.

“It is critical that banks and the various non-bank entities find fair and sustainable solutions for borrowers in difficulty,” he said.

“The Government will be monitoring the situation very closely in the months ahead and will continue to engage with the financial institutions in the interests of customers and the wider economy.”

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