Financial impact of Covid-19 may be hidden, Flac says

The rising cost of living could put further pressure on families struggling with indebtedness as a result of the Covid-19 pandemic, it has been claimed.

The Free Legal Advice Centres (Flac) analysis of payment and credit breaks during the pandemic has said many people who availed of such breaks were between the ages of 50 and 60.

They had drawn down their mortgages when the property market was vastly inflated in the mid-2000s and were now struggling to make repayments.

In its report From Pillar to Post, the third arising out of the Covid-19 pandemic, Flac is critical of the lack of information being provided by the Central Bank.

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The regulator produced figures for those who availed of mortgage breaks during the first lockdown between March and June of last year and updated the figures in September.

At the end of June last year 220,546 payment breaks were approved during the first lockdown, representing 10 per cent of the value of outstanding mortgages in the State.

By September that figure had almost halved to 114,154 mortgages and by the end of December all but 2,000 family home mortgages and 1,200 consumer credit payment breaks had come to an end. It has produced no figures since.

Flac says the lack of information means that a number of key questions have gone unanswered about the economic consequences of the pandemic this year.

Report co-author Dr Paul Joyce said the omissions were more puzzling as the longest lockdown, between Christmas last year and May this year, was mostly in 2021 and hundreds of thousands of workers were unable to work and would therefore struggle to have paid their mortgage.

“Payment breaks were still supposed to be available on a case-by-case basis into 2021, but we don’t know if they were offered to anyone. There is no update on that at all,” he said.

“There is a big data deficit here. Maybe they [the Central Bank] have the information, but they certainly haven’t published it. It’s worrying.”

Dr Joyce accused the Central Bank of being complacent about the economic impact of Covid-19 on individuals and families.

“It is coming into very sharp relief now because we are all finding, regardless of our circumstances, that everything is getting incredibly expensive,” he said.

The number of people in arrears on gas and electricity bills is increasing all the time, he added.

Coupled with the rising cost of living will be an end to pandemic unemployment payments (PUP) which may see struggling businesses go to the wall.

“Some people who are on the PUP may not go back to work. These are very real fears.”

The regulator has yet to respond to the allegations made by Flac.