Call for banks to reverse rate hikes amid surge in mortgage arrears

ONE mortgage holder in 20 has been unable to make monthly repayments for more than three months and experts fear the figures could be even worse.

Of the almost 790,000 mortgage holders in Ireland, 36,438 were in arrears at the end of June for more than 90 days.

Figures from the Central Bank and Financial Regulator show that by the end of June the number of mortgage accounts in arrears for more than 90 days jumped 12.7% compared to the end of March. The figures show of these 24,797 were more than 180 days in arrears.

Director of the Irish Mortgage Corporation, Frank Conway, said over the past 12 months, mortgage lenders have introduced a series of interest rate increases on standard variable rate mortgages and these hikes are now evident.

“Lenders need to be cognoscente that mortgage holders have an upper limit as to how much they can afford their mortgage repayments increasing and balance those decisions with the financial capacity of their customers,” he said.

Permanent TSB increased charges the most and arrears at the bank has exceeded the national average.

“I call on mortgage lenders to reverse some if not all of their recent decisions to increase costs, especially for those mortgage holders who prove they are experiencing extreme financial hardship,” said Mr Conway.

Close to €7 billion was owed in relation to accounts more than 90 days in arrears, of which €4.8bn was owed for accounts over 180 days in arrears. Overall mortgage debt outstanding for private residential mortgages fell by over €339 million since the first quarter of 2010.

Fine Gael housing spokesman Terence Flanagan said the true scale of the arrears problem is likely to be even worse than what is reported by the Central Bank. He said the figures do not take account of recent Permanent TSB and EBS rate increases due to a time-lag in reporting mortgage arrears numbers.

“Future ECB interest rate rises will also drive some homeowners into repossession territory. There is a fear that the numbers in arrears will spike in the next two years, as redundancy payments start to run out,” he said.

The quarterly report also revealed 387 homes were repossessed in the year to the end of June.

However, the Irish Banking Federation (IBF) said the level of home repossessions by mainstream lenders is still low. It said the “effectiveness of forbearance” from banks in helping people to manage their arrears situation and to stay in their homes is evident from the continuing decline in repossessions.

IBF chief executive Pat Farrell said mainstream lenders remain committed to doing everything possible to help people with genuine repayment problems.

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