Borrowers must be protected from owing extra interest due to payment break extensions – Pearse Doherty TD
Sinn Féin Finance spokesperson Pearse Doherty has welcomed the decision by the retail banks and other lenders to extend payment breaks from three to six months for borrowers affected by the Covid-19 crisis.
Deputy Doherty has written to the Central Bank and the five retail banks calling for this to be accompanied by an interest break, as customers currently face paying thousands more in interest if they apply for a payment break.
Teachta Doherty said:
“The extension of payment breaks from three to six months by banks and other lenders is a necessary and welcome step.
“However, this extension does not currently go far enough. The fact remains that anyone who avails of such payment break will find interest accrues during the period, meaning they will owe more to lenders once the Covid-19 crisis ends.
“In many cases, this will see borrowers owing thousands of euros more to their banks than if they had never applied for a break. This is simply unacceptable and unfair. It will only cause further financial hardship for people already under immense pressure.
“The hundreds of thousands of people who have lost jobs or income will remain unable to meet their loan or mortgage repayments for some time into the future due to this unprecedented crisis.
“Last week, I raised a case in the Dáil of a mortgage-holder who will owe KBC an additional €7,700 after applying for a three-month payment break.
“By extending the break period from three to six months, the additional amount in interest owed will only increase. This cannot be allowed.
“Borrowers need an interest break during this period, with no increase in their outstanding balance once the payment break ends.
“Today I am writing to the Central Bank and the five retail banks to request an interest break for borrowers. I will also seek reassurance that a break extension will not affect the credit rating of anyone availing of it or result in the reclassification of loans as non-performing."