In a release yesterday welcoming the EBA decision to extend the deadline date for new payment break applications to 30 September, the CEO of the Banking and Payments Federation of Ireland (BPFI), Brian Hayes noted that he expected the demand for such breaks to taper off in the coming weeks given the rapid fall in applications already seen in recent weeks.
The BPFI indicated that demand for mortgage payment breaks now is just 3% of what was at the peak, running at just 30 applications a day for some banks, down from 1,000s a day at the peak in March and April. The industry has advanced c.80k mortgage payment breaks and 36k SME payment breaks.
Elsewhere, there is much commentary across the media on the long-term financing actioned by the ECB this week as 742 banks borrowed a record €1.3trn from the ECB at rates as low as -1%. The ECB has noted that €760bn will be used to repay prior ECB loans set to mature, so a net €549bn liquidity injection, with banks expected to use the bulk of this figure to buy sovereign bonds, benefitting from the so-called "carry-trade."
In a recent ECB transparency release, sovereign holdings accounted for c.12% of total assets of EU banks (8.7% at Irish banks) and the ECB’s refinancing activity may push that figure higher. Finally, Bank of Ireland is coming out of the SXXP index (EuroStoxx 600 Index) later today.
The Central Bank in its Financial Stability Review published earlier in the week noted that mortgage payment breaks were advanced to 11% of mortgages across the system (just under €12bn).
Goodbody Stockbrokers say it is not surprising to see the pace of demand for such breaks easing, nor that it is anticipated to slow further as customers in many cases return to employment as lockdown restrictions unwind.
According to Goodbody Stockbrokers, "All the same, its good to see the hard data backing up the trend. In relation to the ECB financing measures, we understand that the Irish banks are unlikely to have participated in the latest round given extensive excess liquidity already and also a desire in our view to reduce any external financing dependency and show business model self-sufficiency which in time may help in reducing P2Rs."