Mortgage lenders push back against automatic payment breaks during lockdown

A senior mortgage broker said borrowers will not have the time to apply for a mortgage break on an individual basis

The automatic payment breaks ended at the start of the autumn and 24,000 home loan borrowers were unable to restart paying their mortgages in full by mid-October.

Mortgage lenders have pushed back against a call by a leading broker to re-introduce automatic payment breaks for people who will be unable to work during the latest lockdown, saying they will continue to assess claims on the existing case-by-case or individual basis.  

Senior mortgage broker Michael Dowling, who has held senior positions in the industry, said there was a need to bring back the automatic payments breaks because borrowers will not have the time to get the necessary documentation that is required to apply for a mortgage break on an individual basis, and that the lenders will run out of time to assess the applications.              

At the start of the first lockdown last spring, lenders automatically offered mortgage payment breaks for an initial period of three months, which was subsequently extended to six months.  

The automatic payment breaks ended at the start of the autumn and 24,000 home loan borrowers were unable to restart paying their mortgages in full by mid-October, according to banking industry figures. 

Since September, the banks had started to assess applications from struggling borrowers on a case-by-case basis that requires the customer to provide a significant amount of documentation.

Mr Dowling said that now under any extended lockdown of two months, that banks would not have the time to process a standard financial statement of 15 pages from the customer, three months of bank statements, and payslips. 

"A case-by-case system cannot work," Mr Dowling said. 

It is physically impossible for banks to process thousands of requests. 

Brian Hayes, chief executive at the banking group, the Banking and Payments Federation Ireland said lenders were "monitoring the situation closely and are prioritising those customers most impacted by the pandemic". 

"Payment breaks will continue to form part of the range of solutions available to customers," he said in a statement to the Irish Examiner. 

"These solutions will be assessed on a case-by-case basis and with all the information on the table, an approach that will help lenders to find the best solution for customers who are experiencing financial difficulties," Mr Hayes said.