The Governor of the Central Bank has said he is "uncomfortable" with any "blanket approach" to mortgage lending by banks which refuses loans to customers working for companies on the Temporary Wage Subsidy Scheme.
However, Gabriel Makhlouf also said it is important lenders do a proper assessment of the credit worthiness of borrowers for what is a long-term transaction. He added this may mean some mortgages won't be entered into.
The Governor of the Central Bank made his comments at he appeared at the Dáil's Special Committee on Covid-19 Response today.
The Governor was also asked by Sinn Fein's spokesman on Finance, Pearse Doherty, what the Central Bank was doing about non-payment of business interruption policies by some insurance companies, something Mr Doherty described as "tracker scandal mark two".
Gabriel Makhlouf said the bank was "actively involved" in what he described as "an extremely live issue".
He said the Central Bank was closely observing ongoing legal action which has been taken by a number of businesses against an insurance company, adding that the bank has been talking to the company involved in the case.
The Governor was also asked about the accrual of interest on mortgage payment breaks. It was put to him that some banks in Europe were either voluntarily or had been instructed not to levy interest for the period of the loan break.
He was also asked about reported comments by senior banking officials about this taken from the minutes of a meeting.
The Governor refused to comment on the reported minutes, as he said he had not been present.
However, he said the guidelines of the European Banking Authority (EBA) allowed for both treatment of payment breaks and that "there is a difference of approach" across Europe.
"We're all following EBA guidelines," the Governor told the committee.
He said at a later point that the Central Bank was organising a round table of interested parties to discuss how to tackle mortgage arrears.
Mr Makhlouf said if the issue was not handled well, "we'll be facing into another crisis."
On the overall level of Government debt, the Governor said borrowing to support the economy right now was the correct policy to follow but, he added that there is "no money tree" and the measures the Government has put in place have to be temporary.
The Governor told the committee that the rise in Government debt is "warranted, necessary and affordable", but added that the productive capacity of the economy needs to be supported to prevent long-term unemployment.
He briefed the Covid-19 committee members on the overall fiscal and monetary position of the economy.
His address to the committee outlined the forecasts contained in the Central Bank's latest Quarterly Bulletin.
While his message is that spending to combat the impact of Covid-19 on the economy is the right thing to do at this moment, he also warned that higher debt will leave the country more vulnerable in the future.
He added that the Government will need to show a "clear and credible return" to a lower level of debt.
The Governor of the Central Bank also said today that not all businesses are going to survive the Covid-19 crisis.
He told the Dáil's Covid Committee there needs to be "a flexible menu of responses" to ensure that viable businesses survive and that the economy does not suffer more permanent damage like long term unemployment.
He acknowledged that take up of various government-backed credit schemes for businesses had been low.
However he said he did not think 100% credit guarantees were a good thing and that commercial banks should retain some "skin in the game" when it comes to lending.
Meanwhile, the Covid-19 Pandemic Unemployment Payment will be reduced from today for over 100,000 claimants.
The change will effect claimants who were earning less than €200 a week gross before the €350 a week pandemic payment was introduced on 16 March.
Their weekly welfare payment will fall to €203, which is equivalent to Jobseekers' Benefit.
All claimants who earned more than €200 a week before the payment was introduced will remain eligible for the full €350 support.