Central Bank Report Shows need for Tailored Support for Households in Arrears

15 October 2020
  • Household Credit Market report from Central Bank underlines need for additional “tailored supports” for mortgage-holders in arrears as payment breaks expire.
  • Code of Conduct on Mortgage Arrears (CCMA) must be immediately strengthened to provide a specific list of options that may be suitable for a borrower who is in difficulty.

Responding to today’s household credit report from the Central Bank Labour Finance Spokesperson Ged Nash said:

“Today’s report further underlines the need to provide tailored support for those who are in mortgage arrears.

“There are now nearly 450,000 (220,000 on the PUP and 215,000 more on a jobseekers payment) relying on a working age payment from the State support with an additional 330,000 seeing their wages supported by a government subsidy (EWSS).

“Up to a fifth of households have reported lower income as a result of COVID-19, while the report outlines that borrowers who work in the most affected sectors – such as Arts & Entertainment, Retail and Tourism  – are struggling the most with higher debt-to-income ratios.

“The report also highlights a higher-level of payment breaks in counties such as Louth which have experienced a high inflation of house prices for first-time-buyers due to its proximity to the capital.

“Workers in these sectors and counties are now at a heightened risk and are also facing a prolonged period of uncertainty, not helped by a continued lack of clarity from government on the design of a new wage subsidy scheme to replace the EWSS in April, and a Budget that did little in cash terms for ordinary workers or their families.”

Nash continued;

“We are now facing the prospect of further economic restrictions in the coming weeks or months. Mortgage holders need certainty and they need security. If we are to prevent a wave of defaults, our highly profitable banks – many of which are State-controlled – must work with, not against their customers

“Households need to be protected during this time. Yet as it stands, under the Code of Conduct on Mortgage Arrears (CCMA), banks have the power to pick and choose which alternative payment options they offer to struggling households in mortgage arrears. This only narrows the options for a successful repayment and for people to be given every chance to keep their homes.

“The Central Bank and government must urgently strengthen the Code of Conduct on Mortgage Arrears (CCMA) in light of today’s report to ensure that banks provide a full menu of tailored supports, including payment breaks, to those households in arrears and not just the ones that suit their purpose.

“Structured payment breaks must also be extended for workers in the worst affected sectors as a matter or priority to help support them through the crisis and to ensure that credit ratings are not affected.”

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