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Varadkar says he told banks he would come down on them 'like a tonne of bricks' if they make mortgage break profit

Sinn Féin’s Pearse Doherty raised the issue of the banks charging interest on mortgages that have availed of pandemic payment breaks.

SF Pearse Doherty speaking in the Dáil this afternoon.
SF Pearse Doherty speaking in the Dáil this afternoon.

TÁNAISTE LEO VARADKAR has said if it transpires that the banks are making a profit by giving homeowners a mortgage break during the pandemic he would view it as a “serious scandal”.

Sinn Féin’s Pearse Doherty raised the issue of the banks charging interest on mortgages that have availed of pandemic payment breaks.

Doherty said it is now clear none of the regulators require it.

This week the Central Bank of Ireland and the European Banking Authority (EBA) confirmed that banks were not required to charge additional interest on Covid-19 mortgage breaks.

Since March, nearly 80,000 mortgage-holders impacted by the pandemic have taken payment breaks which will see additional interest charged by as much as several thousand euro over the lifetime of the loans.

Doherty said it was an issue where the government should step in as banks across European countries had not charged customers interest on mortgage breaks.

During Leaders’ Questions today, he accused the banks of profiteering from the pandemic by charging interest accrued on mortgage payment breaks.

Citing minutes of a meeting held with the main banks on 11 May, which was attended by Varadkar as well as former Fine Gael MEP Brian Hayes, who is now the chief executive of the Banking Federation of Ireland, Doherty said the government was told that interest had to be applied throughout the break period.

The Tánaiste denied this, stating that the banks never claimed they couldn’t waive interest. 

He said they were told that someone had to pay the cost of the payment break, adding that the question now is who should pay.

Varadkar said the cost has to fall to someone, and it is now falling on the customers that avail of the break. Ideally, the cost could come from the bank’s profit, but he said the banks won’t make a profit this year.

During the May meeting, Varadkar said he told the banks their interest rates should only be covering their own cost. He said he told the banks:

“If it turns out you make an additional profit out of this… I would see that as serious as the scandal of the tracker mortgages and I would come down on them like a tonne of bricks”

Doherty told the Dáil that the minutes of the meeting are clear, stating they set out that Bank of Ireland claimed it was required by regulators to charge interest during the mortgage break period.

He told Varadkar that PTSB has an online calculator which suggests a payment break on a €250,000 thirty year mortgage would cost the mortgage-holder €6,200. He said something was seriously wrong if the minutes of the meeting are incorrect.

Doherty says there is no country in Europe that is charging customers in this way, stating that Spain legislated to prevent this from happening. He called on Varadkar to bring in similar legislation to protect customers.

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If the banks somehow make a “Covid premium” that is not acceptable” said Varadkar. 

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