Mortgage arrears rules will be needed 'for future challenges'

Central Bank's Colm Kincaid said the framework in place since the financial crash could be needed for any future crisis

The Central Bank has urged distressed borrowers to negotiate with their banks.

Mortgage arrears rules that dictate the way lenders deal with struggling households will likely still need to be kept in place to meet future challenges, a senior director at the Central Bank has said. 

Colm Kincaid, director of consumer protection at the regulator, said the framework that has been in place since the disastrous financial crash could be needed for any future crisis. Many thousands of people could not meet their mortgage repayments and fell into arrears. 

Mr Kincaid said the arrears framework the Central Bank agreed with lenders was still needed.                                      

"It would be foolhardy to think that mortgage arrears is simply an issue from the crisis of the past and fail to anticipate that we will need these frameworks in place also for the challenges of the future," he told an industry conference.

The remarks come as mortgage and debt advisers watch closely for any evidence that arrears are starting to rise as households face into the cost-of-living crisis and as mortgage interest repayments rise.    

Long-term arrears

The Central Bank also released a new analysis of long-term arrears, which have remained at stubbornly-high levels since the last economic crash.

Over half of all the accounts in long-term arrears made no repayments in the last two years, but numbers have nonetheless fallen, showing "that borrowers can exit long-term arrears where there is cooperation between a borrower and a lender", according to the Central Bank.     

The Central Bank again urged distressed borrowers to negotiate with their banks. 

“And there is still more that firms themselves can do to continue to enhance how they engage with borrowers and to go deeper into the suite of options available to reach an agreed resolution with a borrower. We will continue to scrutinise lenders’ progress against their plans and targets in the months and years to come," Mr Kincaid said.