When is a mortgage holiday not a holiday? When you have to pay interest on it. That's at the root of the so-called "Covid penalty" which is being imposed on those who took a break from their mortgage repayments because of the pandemic.
Thousands who were suddenly out of work availed of it because they could no longer afford to pay their mortgages. Now they realise they have added significant amounts to their debts because of the interest due on those missing payments.
"This would mean an additional €4,300 payment on an average €300,000 mortgage with 30 years to go, at a time when many are out of work or have had their wages cut," Labour finance spokesperson Ged Nash pointed out in the Dáil yesterday.
The latest row involving Ireland's much-unloved financial institutions comes as new figures from the Central Bank reveal how many payment interruptions were allowed over the past few months. Almost 160,000 were approved for Irish households and businesses by Irish retail banks, credit unions and credit servicing firms. The total amount of the loans was €20bn. Analysis shows that total included 62,500 residential mortgage holders.
The banks, who account for most of the loans, did react quickly in good faith when the crisis erupted by agreeing to a mortgage moratorium for up to six months. But a dispute has arisen over what happens to the interest due on the missing payments.
Tánaiste Leo Varadkar said yesterday he had warned the banks that the Government would "come down on them like a tonne of bricks" if they make extra profits from mortgage breaks. He also made it clear that the taxpayers were not going to pay the outstanding interest. Ideally, perhaps, the banks should meet the charge out of their profits, but that's unlikely as they are not expected to make massive gains this year.
The CEO of the Banking and Payments Federation, Brian Hayes, has warned that other customers will bear the brunt if costs are not paid by those who availed of a mortgage moratorium.
He knows better than most how unpopular banks are in Ireland and made a good fist of trying to explain the banks' position on RTÉ radio, talking about the dangers of "moral hazard" if borrowers did not pay full interest. On the same programme, Sinn Féin's finance spokesperson Pearse Doherty was having none of what he saw as profiteering by the banks.
Nor was the Taoiseach Micheál Martin in the Dáil satisfied with the banks' explanation. He said a key principle was that banks would not profit and he announced that Finance Minister Paschal Donohoe will be "actively engaging and reviewing the situation".
However, government engagement with banks in the past has not always had satisfactory outcomes for consumers or taxpayers.
The banks will have to come up with a satisfactory response, such as a pledge to deal with each case on an individual sympathetic basis.
Otherwise the predictable response of the public will be that the bailed-out banks are at it again.