High level of long-term home arrears

The number of people facing long-term arrears on their mortgages remains “surprisingly” high despite strong economic growth, a leading housing debt expert has said.

Paul Joyce, senior policy at the Free Legal Advice Centres (Flac) welcomed Central Bank figures which showed all categories of arrears — including early arrears of up to 90 days and long term arrears had fallen.

But he said the number of people at the end of June in arrears for over 720 days, or two years, was down only slightly. He said mortgage payers in long-term arrears were the most vulnerable to the threat of losing their home and, potentially to homelessness.

The Central Bank said that there were 73,706 mortgage accounts in arrears at the end of June, down 2,716 in the quarter. The figures mean 10% of all the 732,439 mortgage accounts in the Republic were in some type of arrears. The number of accounts in arrears for over 90 days fell to 51,570, or 7.1% of all accounts, down 1,350 in the quarter.

Accounts in long-term arrears, or for over 720 days, fell only slightly, by 784, to 32,169 cases, and makes up 44% of all arrears. At €8.6bn, the Central Bank said the value of arrears of over 360 days “remains large”.

“There is progress but surprisingly not as much as you would expect given the economic news. For me, accounts in arrears over a long time are more in danger of repossession. It is a massive number of households,” Mr Joyce said.

He said long-term solutions should include more evidence and visibility of lenders writing debt down to the current market value of the property.

The Government should also spell out any plans it has to improve the mortgage-to-rent schemes for distressed borrowers.

Mr Joyce said the number of repossessions was currently “stable” but it was nonetheless difficult to assess the number of cases before the courts.

The Central Bank figures showed there were 281 court orders for repossessions or property sale in the second quarter. There were almost 120,400 “restructured” residential mortgages, meaning that the distressed borrower and their bank had struck some sort of new repayment deal. At the end of June, 87% of restructured accounts were meeting the terms of the new agreements.

Such deals, the Central Bank said, include interest only mortgages; a reduction in payments; extending the maturity of the mortgage; and capitalising arrears and interest. Other options include split mortgages which “have been introduced to provide more long-term solutions for customers in difficulty”, the bank said.

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