Mortgage lenders and new borrowers urged to be 'realistic and pragmatic' as Covid-19 hits household incomes

Mortgage lenders and borrowers face "a challenging time ahead" as household incomes are hit hard by the economic fallout from the Covid-19 pandemic, the head of the business group that represents the main mortgage lenders has warned.

However, Brian Hayes, who heads up Banking and Payments Federation Ireland, pledged that mortgage banks would nonetheless be "pragmatic".

“Looking ahead, there is no doubt that the period ahead is going to be challenging for the mortgage market and the housing market as a whole, given the changing conditions in the economy and its direct impact on incomes and employment,” Mr Hayes said.

“The change in individuals’ financial and employment circumstances will have an impact on mortgage approvals, with banks taking a pragmatic and responsible assessment of all applications from both a borrower and lender perspective," he said.

And he added: "As we navigate our way through these unprecedented times it will be necessary for both lenders and borrowers to take a realistic and pragmatic approach until such time as we have more clarity on the wider impact of the pandemic as a whole.”

Its new figures showed there were 8,728 new mortgages worth almost €2bn taken out in the first three months of the year before the full onset of the health emergency.