90,000 may face mortgage arrears

CLOSE to 90,000 mortgage holders are likely to be having difficulty paying their mortgage, according to brokers.

Many said they are encountering a growing number of homeowners who say they are experiencing problems paying their bills, including their mortgage, despite interest rates remaining at historic lows.

Recently released figures from the Financial Regulator showed 28,600 homeowners are now in arrears and have been unable to pay their mortgage for three months or more.

Director of the Irish Mortgage Corporation, Frank Conway, said that the number of people having difficulty paying their homeloans is likely to be as high as 90,000 as many homeowners may not yet be more than three months in arrears.

Other brokers contacted agreed with Mr Conway but did not want to be named.

Brokers also said that although banks are generally open to helping homeowners they will only act once there are arrears on an account.

“Not enough banks demonstrate a willingness to be engaging with consumers who are being proactive and have not yet experienced arrears.

“I have seen situations, such as a first-time mother, who was told that the bank could do nothing for her unless she had arrears on her mortgage, despite this being exactly what the first-time mother-to-be wanted to avoid,” said Mr Conway.

Chief executive of the Irish Brokers Association, Ciaran Phelan, said: “One need only look at the job loss and pay cut figures for 2009 to see what an affect the recession is having on people’s financial situation.

“As a mortgage is most people’s single biggest monthly outlay it stands to reason that this is going to be heavily impacted by any reduction in or elimination of take home pay.”

He said the banks are willing to renegotiate repayment terms with customers because it is in their best interests to do so.

“If the customer cannot get back on their feet financially then the bank will not recover the full amount of the loan. Repossession is a last resort for banks, mainly because it is costly and time consuming, and also because in this climate having property rather than cash on the books is less than ideal.”

The Financial Regulator figures show that the number of mortgage accounts in arrears for three months or more has gone up by 8.9%, while there has been a 8% rise in the numbers in arrears for six months or more. At the end of December there were almost 793,000 mortgage accounts in Ireland with a combined value of €118.3bn.

It has been estimated that up to 30,000 householders have decided to switch to interest-only mortgages to lower monthly repayments.

In the long run brokers say it substantially increases the cost of the mortgage.