Long-term mortgage arrears ‘persistently high’

More than 36,350 home-owners in long-term arrears have little or no chance of ever repaying their mortgage, experts believe.

There are 88,290 owner- occupiers behind on their repayments to the banks; more than 40% of which are two years or more in arrears.

This is despite a reduction in all categories of arrears in the final quarter of 2015 when a decline of 4,050, or 4.4%, was seen.

The latest fall in arrears represented the 10th consecutive quarter of decline while arrears of more than 720 days, or two years, fell for the second quarter in a row.

The number of accounts in arrears of more than two years fell by 969, or 2.6%, in the final three months of the year.

Accounts in arrears of between 361 days and 720 days saw the largest quarter-on-quarter decline, of 10.7%.

While the headline rate of arrears continues to fall, long-term arrears remain persistently high, according to Merrion Capital chief economist, Alan McQuaid.

“As the economy improves and unemployment continues to fall over the next year or two, disposable income will go up and help some of those [in arrears].

“That’s where you should see the trend coming down but some of these others of over two years in arrears; if they’re still in arrears now when the economy has grown by almost 8% in real terms last year it’s hard to see how it’s going to change this year or next year.

“Things are improving generally across the country but I suppose certain people are never going to be fixed no matter how well the economy is growing. It won’t make one iota of a difference to those people,” Mr McQuaid said.

His comments were echoed by Davy Stockbrokers chief economist Conall Mac Coille who warned that the situation for those mortgage holders in arrears of more than two years has worsened in the past 12 months.

On average, the 36,000 or so mortgage holders in that situation have racked up arrears of €56,800.

In the last year, that figure has grown on average by more than €5,000 per person.

“If you take their arrears overall, on average they now have built up arrears of €56,800 and that’s up over the past 12 months from €51,400.

“On average, this group of 36,000 people over two years in arrears has gone up by €5,400 or, per month, they’re failing to pay the bank €450,” said Mr Mac Coille For buy-to-let mortgages, the average arrears of those two years or more behind on their repayments is €94,500.

At the end of December, just over 15,000 buy-to-let mortgage accounts were in arrears of more than 720 days.