Brokers criticise 'onerous' mortgage payment breaks process facing unemployed households

New European guidelines extending payment breaks into 2021 will not apply here

Brian Hayes, CEO of the Banking and Payments Federation, said lenders would continue to use the case-by-case system in assessing customer applications for payment breaks.

Leading mortgage brokers have criticised what they say are burdensome demands Irish banks are making on unemployed households applying for mortgage payment breaks.  

It comes as the Central Bank said that although the pan-European regulator, the European Banking Authority (EBA), had given the green light for banks in other European countries to extend their payment breaks into 2021, the new guidelines will not apply here.

That's because the system of assessing applications on a case-by-case basis as used by the Irish banks was different and helps distressed borrowers to get the "tailored advice" that they need, the Central Bank said.         

The Central Bank has issued a statement regarding the European Banking Authority's decision to reactivate its guidelines on payment moratoria. More information: https://t.co/WRafaeAxQt pic.twitter.com/fZNfiGqMp2

— Central Bank of Ireland (@centralbank_ie) December 2, 2020

         

However, leading mortgage broker Michael Dowling, who has served on many industry bodies, said the EBA decision highlighted the unfair way Irish bank customers are treated compared with other parts of Europe. 

He said Irish banks have reverted to making "onerous" demands on customers applying for mortgage payment breaks under the case-by-case assessments, as the six-month payment breaks ended.  

The process of applying for a payment break is slow and required distressed borrowers who are on the pandemic unemployment payment (PUP) scheme to complete a 12-page application and provide supporting documents, he said.                        

The harsh reality is that if you are on a PUP payment of around €300 a week, you are not in a position to pay your mortgage anyway."

"I would be calling on the banks to make the gesture and they now have the green light from the EBA to do so," Mr Dowling said.

He said there was no reason for Ireland's banks to be treating their customers differently than lenders in many European jurisdictions. 

Padraic Kissane, a member of the Irish Banking Culture Board, said he favoured the current case-by-case system but that the application process was overly burdensome and should be streamlined.   

Paul Joyce, senior policy analyst at the Free Legal Advice Centres, or Flac, said there could be a problem with payment breaks because they can store up debts for households. 

But there was no evidence that households were abusing the former six-month payment breaks, he said.    

If you are worried about how to manage your mortgage repayment issues, we advise you to speak with your lender as soon as possible. They have experienced staff who will work with you to try to find the best solution for you. Visit https://t.co/JNlq6NxwYi for more information. https://t.co/3HkuEFiEwW

— Banking & Payments Federation Ireland (@BPFINews) December 1, 2020

  

Brian Hayes, head of the banking group, the Banking & Payments Federation Ireland, said lenders would continue to use the case-by-case system in assessing customer applications for payment breaks. "However, the industry will keep all of the issues under review should there be a serious change in the environment,” he said.

The Central Bank said: 

The approach in Ireland is based on supporting borrowers on a case-by-case basis as appropriate to their individual circumstances."

It said as the EBA’s decision also had shown "the longer that repayments are postponed, suspended or reduced, the more likely it is that the worst-hit borrowers do not receive the immediate tailored financial advice or supports needed to address their specific circumstances".