Mortgage borrowers previously in arrears but who are now up to date with their monthly payments have had difficulties in automatically accessing the three-month mortgage payment breaks, according to a leading broker.
Michael Dowling, who is also a Personal Insolvency Practitioner debt adviser, said his experience in recent weeks is that mortgage customers who were in arrears were being asked to fill in long and detailed financial assessments.
He said that the expectations were that the three-month payments deferrals would be available automatically for people whose income had collapsed during the Covid-19 crisis, when the scheme was launched by the five main banks last month. Under the scheme, there is no writing off the capital or interest payments, and the deferred payments are consolidated into the overall mortgage.
The conditions are the borrower has to be up to date with the payments and wasn’t in arrears in the last 12 months, Mr Dowling said.
However, he said that some customers, who might have been in arrears but who are no longer in arrears, are facing a long drawn-out application process. “There were expectations that everybody would get it but it turns out that not everyone will get the payments break,” Mr Dowling said.
He said he had no issue with the plans of the banks to consolidate the deferred payments into the mortgage but he nonetheless thought that lenders, at a minimum, could have cancelled the interest payments. The jobs shakeout under the Covid-19 crisis was raising a whole new set of debt problems for households, who hadn’’t fully recovered from the previous crisis, he added.
The main banking industry representative group, Banking & Payments Federation Ireland, said last week the payment breaks will more than likely be extended to six months.
In new figures, the Department of Employment Affairs and Social Protection said there were 591,000 people receiving the main €350-a-week pandemic payment -- up by 7,000 from the previous week, and 205,000 people on the live register at the end of March. Including payments under the wage-subsidy scheme, the figures mean there are 1.01 million receiving some form of State payment amid the crisis.
Paul Joyce, senior policy adviser at the Free Legal Advice Centres, or Flac, said the Covid-19 crisis will also lead to potential debt problems involving unsecured lending, including HP and Personal Contract Plans, or PCPs, for car finance payments.
“It will be a big test of the PCPs and HP and there is a question over lenders who are or are not regulated,” he said.
He said that dealers under PCPs want drivers to trade up for a new car “but if you have reduced income how will you raise a new deposit to buy a new model?” he said.
On mortgage payments, Mr Joyce said people in arrears have been overlooked.
“The payments break is designed for those who could no longer pay because of the Covid crisis, which is all well and good, but it has left people with arrears not getting help,” he said.
“I would be deeply worried that when the economic activity resumes, whenever that will be, that people will have accrued arrears in the crisis and the situation for those people with arrears will have got worse.”