Tanaiste Leo Varadkar has said it would be a “serious scandal” if banks were to profit from giving homeowners a mortgage break during the pandemic.
The Fine Gael leader said he will come down on banks “like a ton of bricks” if this is the case.
He said he warned them back in May when he was Taoiseach that it would not be acceptable for them to make money from charging interest.
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 it is now clear none of the regulators require interest to be charged.
He said people are being charged "a Covid penalty" and that all 80,000 customers who have taken the mortgage payment break will face increased repayments and higher debts.
Mr Varadkar said: “I said to them that it cannot be acceptable for them to get some sort of premium from this or make some sort of additional profit.
“I am not sure if it is in the meeting minutes but I remember saying to them that if it turns out that banks somehow make additional profit or premium from this, or if they simply make more money than they would have if the loan had been repaid as originally set out, I would see this action being as serious as the tracker mortgage scandal.
“I told them if that happened we would come down on them like a tonne of bricks.”
Mr Doherty argued that the minutes of a meeting in May between banks and the Tánaiste showed the banks said they had been told by the regulator that they had to charge interest.
However, Mr Varadkar refuted this and said banks “never claimed” they could not waive interest during the period.
And that the issue is that banks were told someone had to pay the cost of the payment break and that cost is now falling on customers.
Mr Varadkar said: “Should taxpayers cover the cost? I do not believe so as it would not be fair on taxpayers, many of whom do not even have a mortgage on a home or business.
“Should this fall to mortgage holders who are up to date with payments? I do not believe so.
“It must fall somewhere and currently that additional cost is falling on the customers availing of that payment break.
“What I must find out over the next couple of weeks as Tánaiste and Minister with responsibility for business is whether the banks will make any extra money from this in comparison to a position where loans had not been extended.
“That is a fundamental point.”
Mr Doherty said the minutes of the meeting “are crystal clear” stating it was written in black and white and stated that Bank of Ireland said this had to be done because the regulator demanded it.
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.
He said there is no country in Europe that is charging customers in this way and called on the Tánaiste to bring in legislation to protect customers.
