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Banks to offer three-month mortgage break to customers affected by coronavirus outbreak

Banks will also defer court proceedings for three months.

BANKS IN IRELAND are set to offer customers affected by the Covid-19 outbreak a three-month mortgage break. 

Meetings between Minister for Finance Paschal Donohoe and the five main banks - AIB, Bank of Ireland, KBC, Permanent TSB and Ulster Bank, as well as the Banking and Payments Federation Ireland (BPFI) – took place today. 

Speaking about the deferral of payments, CEO of the BPFI Brian Hayes said

Hayes told reporters after the meeting that the banks will work out with customers who take a payment break “how to re-profile the mortgage over a period of years”.

“It’s a very small sum of money over a lifelong mortgage, but the outstanding amount remains,” he said. 

He said the banks are putting those systems in place now, but asked customers for patience. 

There had been considerable discussion today about what exact measures would be introduced to support people facing financial pressure because of Covid-19. 

Already, 150,000 people have been put out of work because of the coronavirus crisis and those figures are likely to rise in the coming weeks.

Following the meeting, the BPFI said all five banks are introducing measures to help business and personal customers who are impacted by the outbreak. 

The measures agreed by all five banks today are as follows: 

  1. They will implement a payment break up to three months for business and personal customers affected by Covid-19, to be followed by ongoing reviews depending on the scale and extent of the situation. Customers wishing to avail of a payment break should contact their respective bank.
  2. The banks agreed there is a need for a simplified application process to make it as easy as possible for businesses and personal customers impacted by Covid-19 to receive support from their banks.  The BPFI said it is working with all member banks to achieve this.
  3. The BPFI said banks want to ensure that any Covid-19 application for a payment break and further reviews will not adversely impact the customer’s credit record, and the banks reporting of these facilities. “Banks want to avoid this and are meeting with the Central Bank of Ireland to urgently achieve a solution in this regard.”
  4. Banks will also defer court proceedings for three months.
  5. The BPFI said the banking system stands ready to provide working capital support.

The BPFI also said it has had initial discussions with credit servicing firms and with those non-bank lenders who provide mortgages.

“Both the credit servicing firms and non-bank lenders have issues which we need to address with the Central Bank of Ireland, but both are committed to working with the government and industry to provide the flexibility that people need right now.”

Hayes said the banks are “fully committed” to working with the Irish government and the Central Bank during this extraordinary time. 

Priority must be given to ways in which our collective action can support individual customers, families, businesses and communities across the economy during this time. As the situation evolves, there will be a requirement to further address changing needs across the economy and the banking industry is ready to respond promptly and with agility.

Support for renters

There have also been questions about support for renters who are financially impacted by the outbreak.

Minister Donohoe said the measures today will include support for buy-to let bank customers with tenants affected by Covid-19, to allow them to show forbearance to their tenants. 

He said he expected landlords who were availing of this flexibility to play their part. 

“They cannot and should not evict tenants during this period. And that is my clear message to them.”

Donohoe said he will be speaking to Housing Minister Eoghan Murphy about enforcement.

Earlier, Minister for Social Protection Regina Doherty sent a strong message to landlords that the country was “in this together”.

“Screaming at people for money they don’t have is a futile exercise,” she said. 

In an address to the nation last night, Taoiseach Leo Varadkar stressed that the government was doing all it could to support people during the coming weeks and months.

“For those who have lost their jobs and had their incomes reduced temporarily… there must be help and understanding from those who can give it… particularly the banks… government bodies and utilities,” he said. 

Donohoe has said the country is now facing very significant job losses and will likely record a budget deficit this year.

“I can at this point confirm that we are facing into a period of significant job losses, they are very significant and this has already been felt most of the country.”

He said that he would have a clearer idea of the scale of the unemployment at  end of this week when Live Register figures for March are available.

“We are now in the middle of a very significant economic shock,” he said.

He told that any plans to deliver a budget surplus this year have been shelved, stating it is “very likely we will move into a situation where we have a deficit”.

- With reporting by Dominic McGrath and Christina Finn.

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