Mortgage charity says recovery hasn’t solved arrears crisis

Calls to a charity supporting people in mortgage distress almost doubled in the past two years, challenging perceptions that the country’s economic woes are over.

The Phoenix Project says the number of calls it got jumped 71% since 2013, totalling 5,431 last year.

It also provided 4,000 financial, legal, and/or counselling consultations last year, up 1,000 on 2014, and it says it is in contact with 70 families weekly to provide ongoing support.

Its chief executive, William Prior, said: “Despite talk about economic recovery, there remains a significant, hidden problem with mortgage arrears in Ireland.”

One in eight of all residential mortgages in the country is in arrears of at least three months and Mr Prior said the psychological toll on those in arrears was particularly heavy with one in 10 of all those assisted by the charity reporting they had considered suicide.

He also said the problem was devastating for family relationships. “We estimate that approximately 60% of our clients in 2015 were women who were separated or in the process of going through legal separation. They typically report that financial difficulties are the main reason for separation.”

The charity yesterday published its annual report, warning that 50,000 family homes could be repossessed over the next few years, making an extra 120,000 people homeless.

Its warning is based on Central Bank reports of the number of ‘loss of ownership’ solutions proposed by financial institutions for mortgages in serious arrears, but it also tallies with the most recent mortgage arrears statistics which put the number of residential mortgages in arrears for a year or more at the end of last September at 50,400.

“More worryingly, if the European Central Bank interest rate rises from its current low, many more borrowers who are now meeting full repayments will fall into arrears,” said Mr Prior.

“The Central Bank’s own statistics show that 33.8% of borrowers who have arrears have agreed long-term solutions with financial institutions, while 66.2% of borrowers have agreed short-term solutions. If there is an increase in interest rates, the long-term solutions in place will no longer be affordable.”

The Phoenix Project says it has negotiated agreements on behalf of 18,000 borrowers to enable them stay in their homes since 2008, and is urging the Government to adopt a range of cost-neutral solutions to the problem.

Among those solutions are the far wider use of split mortgages, the extension of mortgage terms to cover the lifetime of the mortgage holder and/or to pass to the next generation, and the introduction of fixed long-term low interest rates.

The charity also says repossession should be prohibited unless the home- owner has alternative accommodation, and it says provisional waiting lists for social housing should be created so that people could get on the list before surrendering their home and not have to wait until they are on a list to apply for rent allowance.

Phoenixproject.ie, mabs.ie (Money Advice and Budgeting Service), and backontrack.ie (Insolvency Service of Ireland) offer further information.

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