Interest-only mortgage ‘time-bomb’

The mortgage arrears crisis that has remained stubbornly present in the economy could worsen in the coming years as a result of higher repayments on certain mortgage types, the Central Bank has warned.

The interest-only period on more than 40% of original interest-only mortgages is set to expire in the next two years.

This will result in increased payments for 21,500 mortgage holders, many of whom may not be able to afford the increases and fall into arrears, according to an economic letter released yesterday by the Central Bank.