Six month mortgage breaks on way as banks make robust defence of payment deferrals

Six month mortgage breaks on way as banks make robust defence of payment deferrals

All five main banks, as well as vulture funds, are set to extend so-called payment breaks for mortgage customers from the current three-month period to six months, as the main banking industry group revealed that a “significant” number have already applied for a payments deferral.

Brian Hayes, chief executive of the Banking and Payments Federation Ireland, said that a minimum of 45,000 mortgage borrowers, accounting for 5% or 6% of all home-loan borrowers, had already applied and that he expected more to apply for the payment breaks.

The former Fine Gael MEP and ex-junior finance minister, who has led the banking industry group since last year, told the Irish Examiner the main five banks he represents were in talks with the regulator about extending the break period for a further three months.

He expected the likely agreement to also include mortgage servicing firms and the non-bank entities which have bought non-performing mortgage loans from the main banks in the last 18 months.

Asked if the number applying for a break would rise significantly, Mr Hayes said the 45,000 number was a minimal figure because it didn’t include owners of mortgages outside of the five mortgage lenders. However, he would not comment on how many applications the banks have factored in, in terms of projecting the peak number and their costs in handling the fallout of the Covid-19 crisis.

“A lot of this will be predicated on where the economy will be in in a few months’ time. If you took your break out in April, May [or] June then you have got a decision on whether to extend this, or whether or not you have a job to go back to,” Mr Hayes said.

“We have to see whether an extension is agreed with the regulator and we are in discussions on that right now about a second payment break. But as of now, the figures do suggest a significant cohort of people have sought support on this and it is impossible to know the total and final number.”

On SMEs, Mr Hayes said banks had given around 14,000 payment breaks and 3,200 applications for working capital loans. He rejected the idea that banks should forgive debt in the crisis.

    The current restrictions started on Friday, March 27. They mandate that everyone should stay at home, only leaving to:
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