How are banks reacting to Covid19?

Howdy do folks,

Not seeing a whole lot on this, in terms of actual measures announced, but I have heard the topic mentioned a few times on the radio as I've been driving a lot over the last few days.

Never really heard a bank spokesperson, more just your general joe soap or business owner commenting that "something should be done".

I would presume that an interest freeze and a set-time payment break would be the best solution (ie; you can skip your March and May payments, and interest being charged will stop accruing until that date).

I've heard mention of banks looking to allow people to defer payments, but even at that, if the interest is still racking up in the background, then it's likely that anyone hit by the virus will be looking at substantial growth in the interest portion of their loans that will need repaying?


Anyone any idea?

Cheers

beggars_bush

Well the shower in AIB decided to introduce quarterly charges and a fee per contactless transaction

antix80

beggars_bush wrote: »

Well the shower in AIB decided to introduce quarterly charges and a fee per contactless transaction

They've delayed the contactless charge, possibly in response to Coronavirus.

As for delaying interest payments... first and foremost, read the terms and conditions of the loan you took out. They probably make references to payment holidays, interest only payments, minimum payments, etc.

Apart from that, it's unlikely banks will announce blanket policies and instead have internal guidelines and deal with things on a case by case basis. It wouldn't make sense to put a blanket freeze on interest charges when not everyone requires it.. some people are working as usual, others maybe lost jobs/went out of business so don't require the asset (e.g. van) they're paying interest on to get to work and will be able to sell it to clear the remaining loan.

So.. take a deep breath before joining the far-left brigade of "the bankers aren't doing enough", and "employers should have to pay everyone not to come to work". The situation is developing. Let's not panic yet.

LastStop

What about new business Lending ? Any word on whether banks are going to put a freeze on issuing new loans/mortgages? If people's job security is in doubt and places are getting shut by the day.... why would a bank issue a mortgage of 250k or home improvement loan of 40k knowing that in a month they could be dealing with that person saying they can't afford to repay.

Saudades

What's the likelihood of branches temporarily closing?

Fireball81

BOI have waived all contactless fees

AIB have deferred the introduction of contactless fees

JTMan

Saudades wrote: »

What's the likelihood of branches temporarily closing?

Zero. In Italy, China and elsewhere bank branches stayed open. Bank branches are essential retail services for some especially the elderly.

Delta2113

€30 contactless limit going to €50.

joeguevara

JTMan wrote: »

Zero. In Italy, China and elsewhere bank branches stayed open. Bank branches are essential retail services for some especially the elderly.

This would be an indicator that they would close. Obviously learn from Italy mistakes but anything to stop elderly congregating in public.

From what I understand, if you take part in the 3 month holiday from loans/mortgages, your interest is still accruing on the principal, so will effectively cost you more in the long run. No different than if you'd just not bothered to pay for 3 months anyway. :rolleyes:

joeguevara

Deleted User wrote: »

From what I understand, if you take part in the 3 month holiday from loans/mortgages, your interest is still accruing on the principal, so will effectively cost you more in the long run. No different than if you'd just not bothered to pay for 3 months anyway. :rolleyes:

Firstly, the main issue is that the pause will have no impact on your credit rating. Secondly there is no decision on whether interest would accrue or not. In UK it has been decided that interest would accrue but it’s peace of mind with regard credit rating. No way three months will be enough though.

bush

Is this in place yet does anyone know?

is_that_so

bush wrote: »

Is this in place yet does anyone know?

This was only announced yesterday. The how is still being sorted out but given how quickly a lot of measures have been implemented it should be soon enough.

SEPT 23 1989

I thought all new mortgage applications were heavily stress tested after the crash

Q&A

SEPT 23 1989 wrote: »

I thought all new mortgage applications were heavily stress tested after the crash

They are stress tested against increases in interest rates and possibly falls income but no stress test is going to be based on the sudden increase in unemployment we're experiencing.

If a bank stress-tested based on borrowers losing all their income there would be no lending. Lending is risky lending rules reduce risk but don't do away with them totally.

joeguevara

joeguevara wrote: »

Firstly, the main issue is that the pause will have no impact on your credit rating. Secondly there is no decision on whether interest would accrue or not. In UK it has been decided that interest would accrue but it’s peace of mind with regard credit rating. No way three months will be enough though.

My issue is that by not freezing (or heavily reducing) interest on the amount owed, because the amount owed is going to stay higher (due to the payment break/holiday) your mortgage is actually more profitable to a bank, than it would be if you'd been paying up on time.


Reducing interest to 0% for 3 months would cost the bank a few euro, but surely they have that in their reserves. Just seems a little unfair to me, personally.

Q&A

[Deleted User] wrote: »

My issue is that by not freezing (or heavily reducing) interest on the amount owed, because the amount owed is going to stay higher (due to the payment break/holiday) your mortgage is actually more profitable to a bank, than it would be if you'd been paying up on time.


Reducing interest to 0% for 3 months would cost the bank a few euro, but surely they have that in their reserves. Just seems a little unfair to me, personally.

It's the interest on loans that is the banks profits. For a great many loans it's more than a few euro. If you don't capitalise the missed interest payments the banks will have to absorb the loss on the loans

Moral hazard is an issue. Why would anyone pay their loan installments if they thought they could get away with an interest free loan.

The capitalising the interest is the happy medium between the banks going after people and kicking them out of their homes and bankrupting the banks. It helps keep those who can't afford to to pay in the short-term while not disincentivising those that can pay.

jag con

Very simple i was onto BOI today and all they will do with the mortgage is you can take a 3 month break but the interest and payments will be added to the mortgage after 3 months, Therefore you will be paying more for your mortgage. Simply the banks are promising and not delivering

Screwed the country we bailed them out and then when we need help they'll do feck all.

na1

Just got an email today that AIB is CANCELLING the €2,500 no fee rule!


Your Current Account banking has previously been provided free of maintenance and transaction fees when you have kept a minimum balance of €2,500 in each quarter. This option will be withdrawn on 30th May 2020.

That's very nice timing with supermarkets who are stopping/discouraging cash payments...

duffysfarm

What info do you gave supply them with to get the break? I.e. payslips or note from employer to say job is gone or do they just do it over the phone?

jag con wrote: »

Very simple i was onto BOI today and all they will do with the mortgage is you can take a 3 month break but the interest and payments will be added to the mortgage after 3 months, Therefore you will be paying more for your mortgage. Simply the banks are promising and not delivering

Screwed the country we bailed them out and then when we need help they'll do feck all.

PopePalpatine

na1 wrote: »

Just got an email today that AIB is CANCELLING the €2,500 no fee rule!


Your Current Account banking has previously been provided free of maintenance and transaction fees when you have kept a minimum balance of €2,500 in each quarter. This option will be withdrawn on 30th May 2020.

That's very nice timing with supermarkets who are stopping/discouraging cash payments...

FFS, BOI probably aren't far behind them.

jag con

duffysfarm wrote: »

What info do you gave supply them with to get the break? I.e. payslips or note from employer to say job is gone or do they just do it over the phone?

Hi explained everything over the phone but have a letter for them if they require it.

jag con

jag con wrote: »

Hi explained everything over the phone but have a letter for them if they require it.

Considering they've been given a thumbs up to do this, and it benefits them financially, I can't imagine they'll care too much about you wanting the holiday.


It's in their interest to give it to you at the moment, and with the amount of people likely to be looking for it, I'd say they'd accept just the phone call. I don't think they'd want your letter aswell?




That said, I've a big loan with the Credit Union (who should have been involved with this, in my opinion). I rang them today and they said they'd get back to me tomorrow. I presume they will at least match what the banks are doing.

Earleybird

jag con wrote: »

Screwed the country we bailed them out and then when we need help they'll do feck all.

So your solution presumably is charity all round? You'll be moaning when they need another bailout then.

jag con

Earleybird wrote: »

So your solution presumably is charity all round? You'll be moaning when they need another bailout then.

You presume wrong Earleybird, All I want is a break for 3 months and add 3 months to my mortgage term, as what was announced by the government with no penalties etc.Simple, not charity.

My view on the banks is that they were called in to the government and offered a short term solution, but that short term solution is nothing new for the customer. Anyone can apply for a mortgage holiday on any given day.

c.p.w.g.w

PopePalpatine wrote: »

FFS, BOI probably aren't far behind them.

Going to drive folks to the likes of N26 & Revolut

joeguevara

jag con wrote: »

Very simple i was onto BOI today and all they will do with the mortgage is you can take a 3 month break but the interest and payments will be added to the mortgage after 3 months, Therefore you will be paying more for your mortgage. Simply the banks are promising and not delivering

Screwed the country we bailed them out and then when we need help they'll do feck all.

Seeing as this hasn’t been formally announced and the finer details are not as yet agreed with government, the employee is only telling you what the current process is. Wait and see what is finally agreed.

We wanted a payment holiday and it is unprecedented that it is being given. Hopefully it will be a good deal but interest is the least of our worries.

The J Stands for Jay

Delta2113 wrote: »

€30 contactless limit going to €50.

Someone tell Tesco to get rid of their limit on Google Pay

kravmaga

c.p.w.g.w wrote: »

Going to drive folks to the likes of N26 & Revolut

A lot of people including myself and my partner went to Revolut and N96 over a year ago.

bizidea

Bank of Ireland are upping their cash and cheque handling fees by 33% great to see them putting their shoulder to the wheel by charging us more

evosteo

Partners shop is closing down this evening due to the virus so she will be out of work for the foreseeable.

Chances are it may never reopen as it was already in financial difficulty.

Currently in year one of a 5 year fixed with EBS,

Has anybody contacted them to request a 3 month or 6 month extension to their term?

There are so many scenarios out there so i dont think this will be straight forward.

I though they announced in the news that the 3 or 6 months would be added onto the end of your term? i.e payments would remain the same for the rest of your term, you would just pay for an additional 3-6 months?

Im nervous now after reading below about increased payments etc...

Ill be able to manage next months payment but after that we maybe in trouble as there still all the other bills to contend with, ESB, credit union loans, credit card payments, groceries etc...