The Minister for Finance has asked banks and non-bank lenders to demonstrate how they are assisting mortgage borrowers who are experiencing difficulty in making repayments due to rising interest rates.
It follows a meeting which Michael McGrath convened with representatives of the banking and mortgage sector today to discuss the situation.
The meeting was attended by the chief executives and senior representatives of the retail banks, as well as credit servicing firms and the industry organisation, Banking and Payments Federation Ireland.
Also in attendance was the regulator, the Central Bank of Ireland, as well as the Citizens Information Bureau, the Money Advice and Budgeting Service and the Insolvency Service of Ireland.
The European Central Bank has increased key interest rates by a total of 3.75% since the end of July last year, with a further rise potentially to come next month.
Those increases have been passed on in full by Irish based lenders to borrowers with tracker mortgages and in part to those with variable and new fixed rate mortgages.
The hikes are putting growing pressure on many borrowers, particularly around 100,000 customers whose loans were sold by banks to investment funds and are serviced by credit servicing firms.
Many of these are unable to move their loans to other providers due to their credit history, but because credit servicers generally do not provide fixed rates the borrowers rates have escalated to as much as 8.5%.
"I am acutely conscious of the impact that rising interest rates are having on mortgage borrowers," said Michael McGrath.
"Many mortgage holders have been in direct contact with myself, my Department and political colleagues, sharing their own personal story and I know that many are worried about their ability to pay their mortgage now and in the future," Mr McGrath said.
"We heard at first hand at the meeting today from MABS and the Insolvency Service of Ireland about the real-life examples they are dealing with and the increased demand for their services generally," the Minister said.
The minister added that the vast majority of mortgage holders are making a genuine effort to repay their loans and supports are available.
But he warned that the industry must engage with customers to prevent them falling into arrears.
"It will now be necessary for the industry to demonstrate that they are delivering for borrowers in difficulty with supports and certainty, and developing long-term sustainable solutions for borrowers," he said.
"I have asked the industry representatives to reflect on the discussion today and to set out their response as a matter of priority," he added.
The Central Bank is also conducting work to ensure regulated firms are meeting its expectations to act in consumers' best interests and support them.
"I support the ongoing work of the Central Bank to ensure that the financial system identifies how consumers could be better supported at this time, with the potential for greater coordination by firms including in the area of switching, and where the information provided to consumers, and the options available to them, could be enhanced," Mr McGrath said.
The Central Bank's Deputy Governor for Consumer and Investor Protection Derville Rowland reiterated the need for industry to support those mortgage holders affected by increasing costs of living and increasing interest rates.
Derville Rowland said this includes potential greater coordination by firms on switching and providing enhanced information to consumers on the options available to them.
She also stated that firms must be proactive, responsive and coordinated.
"The Central Bank continues its phased work to scrutinise firms to ensure that those borrowers who should expect to be able to switch product or provider are supported to do so, and those facing financial difficulties are supported with alternative repayment arrangements, where appropriate, and that the regulatory framework we are charged with supervising is operating as expected," she added.
Meanwhile, Brian Hayes, the chief executive of BPFI, said today's talks were both "open and constructive" and focused on the important role the industry is playing in supporting customers through the current cost of living challenges."
"BPFI and its members have been working closely with the Department of Finance, the Central Bank of Ireland and other key stakeholders and will continue this engagement in the months ahead to ensure our collective efforts are fully focused on providing the help and support borrowers need in this difficult economic environment," Mr Hayes added.
