Banks may extend mortgage breaks to six months – BPFI

The country’s five retail banks may extend loan repayment breaks to help homeowners cope with the impact of the coronavirus to six months from the three months currently in place, the head of their representative body has said. 

The banks agreed the measure in the middle of last month and had granted or were close to completing 45,000 mortgage breaks by the end of last week, Banking and Payments Federation Ireland (BPFI) said. 

Almost 14,000 breaks and 3,200 working capital facilities have also been put in place for businesses. 

“There is an expectation, because this has happened in other European countries, that the potential of a six-month break may well apply,” BPFI’s chief executive Brian Hayes told an Irish Times podcast. 

“We’re in discussions right now with our regulator, the Irish Central Bank, and with the industry to see how that might work because if you don’t pay for six months that is a pretty large amount of money you owe across the term of your mortgage,” Mr Hayes added. 

The talks with the Central Bank centre around the regulatory treatment of those who would continue to receive breaks, Brian Hayes said. 

The three-month breaks do not impact customers’ credit record, and the banks reporting of the facilities. 

Brian Hayes added that some of the mortgage holders who had sought a break were among the almost one-in-eight borrowers whose loans have already been restructured, mostly as a result of the financial crisis a decade ago. 

“Some people won’t get through this, and that’s the reality we face. Inevitably it will lead to more non-performing loans, but we need to minimise that in terms of the regulatory treatment, if the length of time is six months,” he said. 

“Losses will emerge right the way across the sector and that’s just the inevitability of the recession we’re facing,” he stated.

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