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Government inaction on Covid-19 payment breaks risks default cliff for thousands of borrowers - Pearse Doherty TD

24 September, 2020 - by Pearse Doherty TD

Pearse DohertySinn Féin spokesperson on Finance Pearse Doherty TD has criticised the government for waiting until the 11th hour to extend payment breaks for borrowers impacted by Covid-19.

Speaking today, the Donegal TD warned that unless these payment breaks are extended by Wednesday, thousands of borrowers risk falling into distressed debt.

Teachta Doherty said: “I am alarmed to read reports that the government is waiting until Monday to ask the banks to extend Covid-19 payment breaks.

“This is just two days before the extension deadline.

“In March, the European banking watchdog allowed banks to provide payment breaks on mortgages and loans without automatically triggering default and debt restructuring. But these payment breaks must be granted before the September 30th for these protections to apply.

“In Germany, Spain, Italy and Portugal, affected borrowers have been granted payment breaks of up to 12 months. But here the government and banks have only offered breaks of six months.

“This means that the government has until Wednesday to secure an extension to these breaks and avoid thousands of borrowers falling into default.

“That they have waited until Monday, two days before the deadline, is further proof of their hands-off, out-of-touch and amateur approach towards the difficulties faced by mortgage-holders and borrowers at this time.

“Last week I wrote to the Minister for Finance and CEOs of the five retail banks requesting that a further extension is granted to borrowers who have taken Covid-19 payment breaks, without the application of additional interest.

“To date I have received no response. 

"Figures published this week by the Central Bank show that 74,000 mortgage payment breaks have been granted by the five retail banks since the outbreak of Covid-19.

“The Banking and Payments Federation say that 37,000 of these borrowers are already on the three-month extension with their breaks due to end in the coming weeks.

“With unemployment remaining high and cuts to the Pandemic Unemployment Payment yesterday, many of these households will be unable to resume their mortgage repayments.

“For weeks I have called on the government and banks to extend payment breaks for Covid-impacted borrowers, without additional interest accruing during the period of the break.

“Their delay risks a debt crisis for thousands of households.”

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