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The Government will come down on banks \u201clike a ton of bricks\u201d if they profit from interest charged on mortgage payment breaks, Leo Varadkar has said.<\/p>\nThe Government will come down on banks \u201clike a ton of bricks\u201d if they profit from interest charged on mortgage payment breaks, Leo Varadkar has said.<\/p>\n
The T\u00e1naiste said it is \u201cunacceptable\u201d for banks to take advantage of the Covid-19 crisis.<\/p>\n
He made the comments after Sinn F\u00e9in TD Pearse Doherty claimed that customers making use of payment breaks are being charged thousands of euro in interest.<\/p>\n
Since March, nearly 80,000 mortgage-holders affected by the pandemic have taken payment breaks which could see several thousand euro in additional interest charged over the lifetime of the loans.<\/p>\n
Mr Doherty, the party\u2019s finance spokesman, also said that retail banks and the Banking and Payments Federation of Ireland (BPFI) \u201cmisled\u201d senior ministers during a meeting held in May this year.<\/p>\n
He told the D\u00e1il that minutes reveal that a number of the banks\u2019 chief executives claimed that charging interest is required by the financial regulator.<\/p>\n
However, the Central Bank of Ireland earlier this week said there is no such requirement.<\/p>\n
Mr Varadkar said the banks \u201cnever claimed\u201d they could not waive interest for that period.<\/p>\n
\u201cThey did say that it will be possible for them to waive interest for that period,\u201d he said. \u201cThe issue that they had was that somebody had to cover the cost of the payment break.<\/p>\n
\u201cThe question is, who covers that cost? It doesn\u2019t come out of the bank\u2019s profits \u2013 ideally I think it should, but they have no profits this year and may not for a number of years because of what\u2019s happening to our economy.<\/p>\n
\u201cShould taxpayers cover that cost? I don\u2019t think so. I don\u2019t think that would be fair on taxpayers.<\/p>\n
\u201cShould that fall on mortgage-holders who are up to date with their payments? I don\u2019t think so.<\/p>\n
\u201cSo it has to fall somewhere, and that additional cost at the moment at least, is falling on the customers who are availing of that payment break.<\/p>\n
\u201cBut I was very, very blunt with the banks and very clear with them, and I sought an assurance from them that, as a consequence of them extending these mortgages and then extending these loans, they should only be covering their own costs.<\/p>\n
\u201cI said to them very clearly that, if it turns out that you somehow make an additional profit out of this, or an additional premium out of this, that you somehow make more money out of this than you would have if the loan was paid back in time, that I would see that as serious.<\/p>\n
\u201cWe would come down on them like a ton of bricks. That is the fundamental thing that I need to find out over the next couple of weeks.\u201d<\/p>\n
Mr Doherty said: \u201cThere is no country in Europe that is faced with such high penalties as a result of this payment break than Ireland because of the high level of interest rate.<\/p>\n
\u201cYou should do what the Spanish government did on the 13th of March, which is that they brought in legislation, legislation which I have given to your Minister for Finance, that would prevent the banks profiteering on the back of a pandemic where the economy was shut down, and people unfortunately are unable to pay their mortgages at this time.\u201d<\/p>\n