The Public Expenditure Minister has called for approved mortgages for customers on the wage subsidy scheme to be honoured, as long as the customer can still afford the loan.
Michael McGrath was commenting amid reports that AIB had introduced a 'de-facto ban' on lending to those receiving State subsidies.
According to The Irish Times, it's part of a 'wide-ranging restrictions on lending' introduced by the bank in response to the COVID-19 crisis.
In a statement, AIB said it believe it's "prudent" to review its mortgage lending policies amid the current economic instablity.
The bank said: "It is imperative that the mistakes of the past are not repeated, that customers are not exposed to unnecessary risk and that their loans are sustainable."
Speaking on Newstalk Breakfast this morning, Minister McGrath said the issue had been brought to his attention by mortgage applicants who had mortgage approval in principle before the pandemic began.
He explained: "When they went about draw-down, the brakes were pressed by the institution on the mere fact that the people were part of the wage subsidy scheme, even though their income was completely unaffected.
"The banks would argue they have to reassess the capacity of the borrower to repay... but for me the key issue is that if the affordability of the mortgage is unaffected, then those mortgages should be honoured."
He said the new Government will now discuss the issue with the banks and the Central Bank.