Long term mortgage arrears "a time bomb"

The rising level of long-term mortgage arrears was labelled a "time bomb" yesterday, while new figures from the Central Bank also signalled an increase in the rate of possible house repossessions.

The quarterly report issued by the Central Bank on mortgage arrears, repossessions, and restructures on family homes showed that while the number of mortgage accounts for principal dwelling houses in arrears fell for the third consecutive quarter, the number of accounts in arrears of over 720 days increased by 5.1%.

That means 35,314 mortgage accounts are in arrears by some two years or more, resulting in outstanding balances of €7.4bn.

The number of mortgage accounts classified as having been restructured increased by 10% in the first quarter of this year, but mortgage arrears campaigner David Hall said banks were “cherry-picking” which loans to restructure and targeting mortgages that suited them.

Director general of the Free Legal Advice Centres (Flac), Noeline Blackwell, said mortgages in long-term arrears were “particularly worrying”.

“For these accounts, the average amount of the arrears has risen from approximately €41,650 to €46,100,” she said.

She also expressed alarm at the growing number of repossession applications that were lodged in the first quarter of the year — 3,093 new applications compared to 525 made in the first six months of last year.

“If applications continue at that rate, over 12,000 proceedings against family homes will have been filed,” said Ms Blackwell.

Mr Hall, CEO of the Irish Mortgage Holders’ Organisation said the figures released yesterday confirmed how banks, “facilitated by [the] Central Bank”, were “cherry-picking which loans and how it suits bank to restructure”.

The number of buy-to-let mortgages in arrears by over 90 days increased from 21.1% in the last quarter of last year to 21.5% in the first quarter of this year. Some 9.2% of all such mortgages are in arrears by more than 720 days, with 520 such properties in the banks’ possession at the end of March, with 73 repossessed in the first quarter of this year.

The Central Bank said restructuring arrangements were continuing to be put in place, with over 5,000 new arrangements struck in the first three months of the year. More than 80% of restructured accounts are deemed to be meeting the terms of the arrangement, and economist Conall MacCoille of Davy Research said: “This no doubt reflects efforts by banks to satisfy the Central Bank’s mortgage arrears resolution targets.”

However, Mr Hall said: “The number of people potentially facing homelessness through inaction in tackling arrears could now be 35,314. This does not include children or partners of the people with the mortgage. The real figure could potentially be up to 90,000.

“In addition, 53% of loans issued by non-bank lenders, for example county councils are in arrears. This is a further silent time bomb as many of these homeowners may find themselves reliant on a social housing system that is at breaking point.”