Banks may offer six month loan repayment breaks to those impacted by Covid-19

Banks may offer six month loan repayment breaks to those impacted by Covid-19

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

The banks – Bank of Ireland, AIB, Permanent TSB, Ulster Bank and KBC – agreed the measure in the middle of last month to help those impacted by the lockdown implemented to prevent the spread of Covid-19. They 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.

Speaking to The Irish Times’ Inside Business podcast, BPFI chief executive Brian Hayes said: “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, Mr Hayes said.

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

Mr 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.

Listen to the interview in full here.

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