Home Economics: Our property finance expert answers your questions
Q We had been in the process of switching our mortgage to KBC from Bank of Ireland for a better rate when the coronavirus hit. It doesn't really seem that important now, but is it something we should plough ahead with or wait until things have settled? We had completed the application and are in the process of gathering the financial information required. So we would appreciate a steer, since there's a lot in it. Are bank staff doing these at the moment?
A I'm not sure it will make too much difference to wait. Banks' priorities have been in diverting hundreds of staff to deal with the more urgent matters arising from the Covid-19 crisis, and many are working from home, like everyone else.
That doesn't mean they're not doing bread-and-butter stuff like processing switches, but everything will take a little longer.
Part of the switching process involves things like property valuations, a surveyor's report and legals, which may not now be possible in the light of distancing regulations and so many professional offices being closed.
However, Trevor Grant of the Association of Irish Mortgage Advisors (AIMA) says you won't be wasting time.
"It's an opportunity to get your financial affairs in order; a mortgage is most people's largest monthly outgoing, so the savings that can be made by switching are generally larger than the combined benefit of switching utilities, mobile phone and health insurance".
He adds that rates have reduced considerably with the lowest hovering around 2.2pc, with many lenders covering the costs of the process.
In time of course, when all this is over, interest rates may be lower again, so perhaps not locking yourself in just yet is a good thing.
He suggests you push ahead with the paperwork where you can - there may be some innovative online uploads you can avail of, and as long as your job (and income) is not affected by the crisis, the bank will be happy to get you across the line when the time is right.
Q I applied for a mortgage payment break from my bank as I've had my hours cut due to the Covid-19 crisis and this is affecting my income, which I hope will be temporary. They have refused - I don't know why I'm surprised, because I thought this was agreed by the Government - citing my previous restructuring, which was from a couple of years ago and which we have paid every single cent due. I am really angry.
A I don't blame you. There has been confusing messaging around this measure, which appears to have been announced before the banks had even sat down with Finance Minister Paschal Donohoe to iron out the details.
While the mortgage break of three months is technically available equally to anyone whose income is affected by Covid-19, in banking parlance, to paraphrase George Orwell, some customers are more equal than others.
Many banks are deciding that those who are in arrears or had a restructure prior to March 2020 won't be able to grab the break.
Rachel McGovern of Brokers Ireland says the rules are "overzealous", and that those most in need are being excluded.
So 31pc of mortgages which have been restructured with arrears over 720 days involve 'arrears capitalisation', which Ms McGovern says should never have been deemed a restructure.
One in five are not meeting the terms of the recap, and banks' systems are effectively throwing out anyone who applies for what they see as a 'second' restructure.
I'm afraid I don't have a clear answer for you, except to apply again. It is taking time for call centres to get trained up, diverted and decisions made.
The answer you got last week may be different next week. Please be persistent; you are not alone.
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The Ryan Review
Two billion? Five billion? 19 billion? In truth, nobody has any idea what this crisis is going to cost taxpayers. While a short, sharp depression in the V-curve favoured by economists is far better than the long U-shape of a deep recession, some serious thinking is going to have to be done for mortgage holders.
Most of us 'get by' every month paying our single biggest bill. Cut our income by 30pc or even 10pc, and it can be the casualty. While the moratorium was a swift and correct decision for those who need it, longer-term thinking is going to have to take place on what comes next.
Simply turfing everybody who cannot regain their financial legs into the pre-existing Mortgage Arrears Resolution Process (MARP) is both unwieldy and uneconomic.