Split mortgages ‘best way’ to keep borrowers in the home

Split mortgages are the most effective way of keeping insolvent borrowers in their homes while ensuring that the taxpayer, through ownership of the banks, can share in the upside of the economic recovery, according to the governor of the Central Bank, Patrick Honohan.

The Central Bank has been at the forefront of efforts to tackle the mortgage arrears crisis. In early March it gave the banks targets to offer solutions to distressed borrowers over the course of this year and then treatments over the course of 2014.

There are a number of potential loan repayment modifications in place. “To be sure, the triage process needs to start with the question: is this a distressed case, or one in which the borrower does have the capacity to come back on track? It is evident that a significant proportion of arrears cases fall into the latter category, as seems to be confirmed by the measured characteristics of households in arrears, as well as the practical experience of lenders engaging with borrowers. Getting these cases back on track is a crucial part of what is now needed, said Mr Honohan, speaking at a conference in Dublin yesterday.