Government must act on mortgage interest for Covid-19 payment breaks
8 July 2020
Spokesperson on Finance, Public Expenditure and Reform
- Labour Dáil motion tonight calls on the Government to stop the banks from charging penalties or surcharges on mortgage arrears accrued during the pandemic.
- Taoiseach tells Labour Leader that Minister for Finance will engage with banks.
With the European Banking Authority clarifying that banks do not have to charge interest on 80,000 mortgage loans on COVID-19 mortgage holidays, Labour Finance spokesperson GED Nash said it is time now for the Government to act to ensure homeowners do not face further fees and charges through no fault of their own, and that simply engaging with the banks is not enough.
Deputy Nash said:
“Despite the rhetoric of solidarity from the Irish banking sector, yesterday it emerged that Irish banks have been charging interest on so-called “mortgage holidays” contrary to the Central Bank and European Bank Authority’s advice.
“This would mean an additional €4,300 payment on an average €300,000 mortgage with 30 years to go, at time when many are out of work or have had their wages cut.
“This goes against the stated position of both the Governor of the Central Bank and the European Banking Authority, with banks clearly told they do not have to change the status and classification of loans where interest is not being charged.
“Several EU countries have acted and legislated in line with the European Bank Authority guidelines (EBA) to protect households & families to ensure that no interest is added to payment breaks. But yet again, in Ireland we have a Government that prioritises the interest and profit margins of banks over that of working people and their families.
“Tonight, the Labour Party motion in the Dáil will demand the Government takes action on rent debt and mortgage arrears. We want the Government now to stop the charging of interest in line with European rules and Central Bank advice. What yesterday’s revelations show is that the approach of the banks earlier this year was wrong, and decisive action must now be taken.
"The Taoiseach told our Leader Alan Kelly in the Dáil today that the Minister would engage with the banks but that is simply not good enough.
“Up to 80,000 households have taken payment breaks, and the overall cost to the banks of not charging interest on warehoused mortgages is projected at €150 million which is a small cost for profitable banks to bear in such unprecedented times. Without action, over the lifetime of a mortgage this will cost families thousands of euro.
“We also need to hear from the Banking and Payment Federation of Ireland on whether they will advise their members to stop this practise of charging interest on warehoused mortgages.”