If banks seek to make profit from giving people a break on their mortgages during the Covid-19 pandemic it would be viewed as a serious scandal, Tánaiste Leo Varadkar has told the Dáil.  

He said he had warned the banks at a meeting in May that it would not be acceptable for them to make money from charging interest when mortgage holders were granted a break on their home loans.  

He said he told the banks at the meeting that if financial institutions made "additional profit out of this... that I would see this as serious as the scandal of the tracker mortgages and we would come down on them like a tonne of bricks". 

Mr Varadkar was speaking in the Dáil in response to Sinn Féin Deputy Leader Pearse Doherty who raised the issue of additional interest being charged on mortgage holders who have availed of the payment break.

Mr Doherty said people are being charged "a Covid penalty", that all 80,000 customers who have taken the mortgage payment break will face higher repayments and higher debts because interest will accrue.  

The Sinn Féin TD said that a Permanent-Tsb customer with a €250,000 mortgage over 30 years who takes a six month break will face an additional cost of more than €6,200.

Mr Doherty argued the minutes of a meeting in May between Mr Varadkar and Bank of Ireland and AIB showed the banks said they had been told by the regulator that they had to charge interest.  

Mr Varadkar said banks never claimed that they could not waive interest for that period - the issue they had was that someone had to cover the cost of the payment break. 

He added that loan breaks of three to six months were very welcome and 140,000 customers have availed of the option.  

The Tánaiste said he felt the cost should come out of the banks' profits, but said they do not have profits this year, he did not think it should be paid by tax payers or mortgage holders. 

He said he was very blunt and clear with the banks and that as a consequence of covering these breaks, they should not look for a profit.

The Tánaiste said "the fundamental issue is whether the Banks will make a profit out of this and that is not acceptable".    

It comes as new data from the Central Bank shows there have been 158,659 payment breaks approved for Irish borrowers by Irish retail banks, credit unions and credit servicing firms.

The total amount of loans involved is €20.1bn.

An additional 68,574 payment breaks have also been given to non-Irish borrowers, mostly in the UK. The amount of loans here is €7bn.