MORTGAGE arrears could peak to a point where one in every 18 home loans would be in arrears.
According to the managing director of the Irish Mortgage Corporation, Frank Conway, mortgage arrears of 90 days or more could peak at 5.5%.
That would push the number of mortgages in arrears for more than three months to over 43,000, said Mr Conway
If banks continue to increase standard variable rates then arrears are likely to hit those levels, he said.
"I think a lot depends on what the lenders do, but I feel that the Permanent TSB numbers are a good indication of where this could be heading. If lenders persist in increasing interest rates outside of the ECB, then I think they will push arrears up," he said.
"If all lenders increase their own standard variable rates by another 50 basis points before the ECB acts, then you could be looking at the national arrears of 91 days past-due moving to 5.5%," he said.
Mr Conway pointed out that Permanent tsb is already at 5.2% arrears and it has also moved its SVR rates up by 150 basis points.
Last week the Central Bank reported that 4.6% or 36,443 of mortgages were in arrears for more than 90 days at the end of June, 12% up on the March figure.
Chief executive of the Irish Brokers Association, Ciaran Phelan said while these figures are increasing strongly every quarter, they don’t allow for recent mortgage rate increases which will further strain those struggling to pay loans.
The number of those in arrears is up 58% in nine months which translates to a 77% annual growth, he said.
"A clear correlation is developing between increasing mortgage rates and mortgage arrears as the Government-supported banks squeeze consumers dry. "Some of this is evident in these numbers, but we would anticipate a further 20% increase in the next quarterly figures," he said.
a d v e r t i s e m e n t
This appeared in the printed version of the Irish Examiner Monday, September 06, 2010
