State ‘should bail out’ struggling homeowners with mortgage relief payment

The state should offer financial assistance to homeowners struggling to service their mortgages in the wake of Covid-19, a consumer advocate has said, amid mounting pressure on the government to extend mortgage repayment breaks .

Brendan Burgess, founder of, said on Monday that rather than asking banks to extend repayment breaks, the government should instead consider offering a mortgage relief payment for those in long-term difficulty, similar to the housing assistance payment for tenants.

“We help people pay their rent if they can’t afford it. We provide social housing for people who cannot afford it. Why is there no help for people who are buying their own homes and struggling with their mortgage? ” he said.

Reimbursement interruptions

The call comes ahead of a meeting on Monday between the government and the chief executives of major retail banks to discuss a potential industry-wide extension of repayment breaks, which are due to end on September 30.

Introduced in March, the breaks were initially offered on a three-month basis, but were later extended to six months. Originally, some 86,000 owners took advantage of the breaks, but by the end of August around half had resumed normal refund procedures, and around 43,000 were still taking advantage of the relief.

Brokers Ireland, which represents mortgage brokers, finance brokers and insurance brokers, has called on banks to extend breaks to provide relief to homeowners.

“Given the grip the pandemic is having on consumers and the economy, unfortunately many mortgage holders will not be able to resume full repayments as they had hoped at this point,” Rachel said. McGovern, director of financial services. to the industry body.

However, not everyone is in favor of it.

Last week, the European Banking Authority said these pauses should be phased out from the end of this month, as planned, and banks should resume offering relief on a case-by-case basis. Similarly, Central Bank Governor Gabriel Makhlouf said it might now be more appropriate to offer such breaks on an individual basis, while Finance Minister Paschal Donohoe last week urged banks to treat beleaguered customers “with sensitivity”, but refrained from asking them to prolong heists any further.

Mortgage issues

Meanwhile, Mr Burgess also questioned whether mortgage breaks were really in the interest of consumers. He said that while having a mortgage break “was an appropriate emergency measure”, it should not be extended, because the longer the duration, the more difficult it is to reschedule and the greater the ultimate financial burden. for borrowers is important.

“As long as the borrower does not pay, the interest continues to increase, so the amount owed by the borrower increases,” he said, adding: “Longer interruptions in payment are not good. for the customers”.

While government-backed repayment assistance is an option, Mr Burgess said better alternatives to repayment breaks include switching from an interest-only mortgage, “so at least the amount owed stops ‘to augment” ; use the Central Bank’s mortgage arrears settlement process to find “a more appropriate medium to long-term solution”; or The government pressures lenders to reduce mortgage rates.

“The average mortgage holder who doesn’t have a tracker pays €300 more per month than they would in another eurozone country,” he said.

Another downside of mortgage breakouts pointed out by Mr Burgess is that if they are forced to do so, banks may be less likely to lend to potential borrowers and/or charge higher rates.

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