The Governor of the Central Bank has said that there is nothing in the system stopping banks from putting further payment breaks in place for borrowers who have been impacted by Covid-19.
After the end of September, banks will no longer be offering any more payment breaks which were put in place back in March as the coronavirus restrictions took effect.
Speaking on RTÉ's Brendan O'Connor programme, Gabriel Makhlouf said if borrowers still see themselves in difficulty, then they should contact their lender and have an early conversation about the challenges they have.
He said lenders need to "start thinking very hard about the individual's circumstances and how they can support them".
He said there's nothing in the system stopping banks from allowing more payment breaks, but said such breaks however needed to be tailored to an individual's needs, rather than system-wide breaks.
He said it was both in the borrower and lenders' interest.
Mr Makhlouf said: "If borrowers see themselves still in difficulty in terms of repaying their loan, the top priority should be they contact their lender and have a conversation early about the challenges they have, and I think the lenders need to start thinking very hard about the individuals circumstances and how they can support them, so banks can allow for more payment breaks.
"There's nothing stopping them in the system."
On the damage a second full shutdown due to Covid-19 across the country would have on the economy, he said the damage would be "very serious".
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He said the shutdown at the beginning of the pandemic during March, April and May was the "lowest point of economic activity this year".
Mr Makhlouf said: "If we're going to go back to a big lockdown we're going to go back to the sort of world that we were in April, where businesses were hit in a big way, job losses were hit in a big way, and households were hit in a big way," he said.
He said a full lockdown, apart from stopping economic activity, would also impact on confidence.
He said: "A full lockdown, apart from stopping economic activity, I think it would have a very big impact on confidence.
"People's confidence in the future, actually on people's wellbeing. I think one of the issues of the moment is people's mental wellbeing and I think we as a community need to think very hard about that"
Mr Makhlouf said we were now seeing a gradual recovery following the initial impact of the pandemic.
He said in the next ten days they would be publishing their latest forecast for the economy.
He said we have seen a recovery from where the situation was in April, but added that the local lockdowns in various parts of the country "certainly were not helping"
Mr Makhlouf added he did not think the country needed to look at some form of austerity in the coming years, as if the current situation was managed well, then that outcome can be avoided.
In relation to borrowing, he said what the government was doing right now was absolutely necessary, but at some point the government's own books had to be put "in better order.
He said: "If we focus on protecting the productive capacity of the economy, we can actually use growth to address this extra debt as opposed to having to use austerity."
Mr Mahklouf said one of the most worrying things from an economic perspective was that the pandemic could lead to "scarring effects" such as long-term unemployment through people losing their skills and losing their attachment to the labour force.
He said they want to avoid those effects, adding that focussing on that should be the priority.
He said there were many businesses out there now that, if not for the pandemic, would be viable.
Mr Makhlouf said heempathised with those businesses and said they needed to be supported.