| 18.4°C Dublin

Paschal Donohoe defends system of mortgage breaks after claim that interest charged is a 'rip-off'

Close

Paschal Donohoe. Picture: Collins

Paschal Donohoe. Picture: Collins

Collins Dublin, Gareth Chaney

Paschal Donohoe. Picture: Collins

FINANCE Minister Paschal Donohoe has defended Ireland's system of Covid-19 mortgage payment breaks after it was claimed the interest being charged by the banks is a "rip-off".

Mr Donohoe said that 70,000 payment breaks are in place for mortgage holders that need support and while banks must not make extra profit from the interest, there is a cost to providing the breaks.

He also dismissed comparisons payment breaks with other European countries.

He said there are limitations placed on the payment breaks in places like Belgium and Spain that aren't in place here.

Rise TD Paul Murphy claimed the interest being charged by the banks is a "rip off" and challenged Mr Donohoe on what the government will do about it.

Mr Donohoe said he wants to ensure that no additional profits are being made from the practice and that mortgage holders are dealt with "fairly".

But he said that there were costs in bringing in the payment breaks and "they have to sit somewhere".

He said there must be clear information given to people receiving the payment breaks about the expense they may face in the future.

He also said that when they resume mortgage payments it must be at around the same level as before the break.

Mr Donohoe said that while there's "concern and debate" about the mortgage breaks they have been a "really significant help to tens of thousands".

Mr Murphy claimed that Mr Donohoe's answer amounted to the government not doing anything about the situation and this was "unacceptable" given the State's part-ownership of some of the banks.

Mr Donohoe referenced the Temporary Wage Subsidy Scheme and Covid-19 Pandemic Unemployment Payment (PUP) as part of his "track record" of helping people during the coronavirus pandemic.

He reiterated that the mortgage breaks should not be "an opportunity for profiteering".

Mr Donohoe added: "It's not a case of what I haven't done. It's a case of what I have done in supporting families in a time of such difficulty and supporting those who are paying these loans."

Sinn Féin's finance spokesman Pearse Doherty has been raising the issue in recent weeks.

Mr Doherty told the Dáil that the banks met Mr Donohoe and then-Taoiseach Leo Varadkar in May and claimed that the charging of interest was required by the regulator.

The Sinn Féin TD said "we know that that was not true".

He said that the Central Bank and European Banking Authority (EBA) have confirmed that interest does not have to be charged.

Mr Doherty said some Permanent TSB mortgage holders could be left with interest payments of more than €6,000 as a result of the payment breaks.

He asked what actions the government will take to "prohibit the profiteering".

Mr Donohoe said the payment breaks were brought in quickly to provide "rapid relief to worried and anxious borrowers - including mortgage holders - in situations where income had been directly impacted by Covid and during a fast moving and evolving public health crisis."

He outlined some of the regulations that are in place.

Mr Donohoe said he and Tánaiste Leo Varadkar have been meeting bank bosses this week and discussing issues relating to the payment breaks.

Mr Doherty said that interest is not charged in schemes in place in Spain and Belgium.

The Finance Minister pointed to limits on the mortgage breaks in both countries that aren't in place here.

In Belgium people with savings of more than €25,000 are excluded in Belgium and there are "very strict criteria" in place in Spain limiting the breaks on the basis of income.

"What we've done here in Ireland is we've made mortgage breaks broadly available to those who need them the most," Mr Donohoe said.

Online Editors