Mortgage and loan payment break essential for laid-off workers and struggling business owners
20 October 2020
- Long term strategy needed for payment breaks in any future lockdowns
- Borrowers should not have credit rating damaged by six week lockdown
With thousands of workers due to be laid off from Wednesday night, Labour Finance spokesperson Ged Nash has called on the government to act urgently and ensure the banks provide for formal mortgage and loan repayment breaks with no interest or penalties, nor any damage to credit ratings.
The Louth & East Meath TD also called for a long term strategy to address issues that may arise next year as well.
Deputy Nash said:
“Banks need to commit to giving mortgage and loan payment breaks for those who will be laid off or have their incomes hit hard later this week.
“The failure to formally extend the initial six-month break period means that any new arrangement mortgage holders might enter into risks damaging their credit rating.
“Structured payment breaks must still be offered to all workers and firms especially in those sectors that are being hit now such as retail and hospitality but also those that are bearing a much longer term hit such as the arts, events and tourism sector, and the gratuitous Covid-19 interest rate penalty interest rate must be dropped.
“There is a window now up to Thursday for swift action from the banks and the Minister for Finance must apply pressure now. Mortgage holders need certainty and they need security.
“We also need a longer term strategy in the event of future lockdowns, and clear communications from the banking sector. The Department of Finance and the Central Bank should engage now with the European Banking Authority on what will happen through 2021 if Covid-19 continues to impact on ordinary people and their loan commitments.
“As I said before, the Code of Conduct on Mortgage Arrears (CCMA) must also be strengthened to provide a specific list of options that may be suitable for a borrower who is in difficulty. As it stands, under the CCMA, banks have the power to pick and choose which alternative payment options they offer to struggling households in mortgage arrears and they often present the options that best serve their interests and not those of the mortgage holder.
“This creates more stress, more uncertainty and narrows the options for a successful repayment and for people to keep their homes.
“If we are to prevent a wave of distress and the risk of more repossessions in the coming years, our highly profitable banks – many of which are part-owned by the State – must work with, not against their customers.”