Experts: Mortgage arrears distress still too high

The number of cases of mortgage arrears has fallen but the home loans debt crisis is still far from being settled, experts have said.

Central Bank figures published yesterday showed t mortgage arrears of any duration on the main home fell to 82,092 at the end of June, down from 98,155 cases a year earlier.

The number of accounts in arrears for over 90 days — the first significant period when banks start recognising arrears — amounted to 7.8% of all outstanding home loan accounts, down from 9.3% in June 2015.

The Central Bank said home loan arrears of more than 90 days have now fallen for 11 quarters in a row.

Mortgage arrears reached a peak in September 2013 when almost 13% of all accounts were in arrears for over 90 days.

The country faced one of the world’s worst property crashes, with prices falling as much as 60% from their 2007 peak.

With unemployment peaking at over 15% in early 2013, many people struggled to service monthly payments on their homes.

The arrears of over 90 days accounts for over €11.5bn in outstanding home loan amounts.

ECB figures continue to show the high-level of all non-performing loans, including mortgage and SME loans, on the accounts of Irish and other eurozone banks.

Irish banks for over three years have been set targets to reduce the level of mortgage arrears and have agreed on ways of dealing with borrowers.

Bank have offered so-called “forbearance” or restructuring deals, including interest-only loans, a reduction or temporary deferral of payments, and extending the term of the mortgage.

Other deals have included capitalising both arrears and interest payments onto the amount owed on the mortgage, as well as offering split mortgages.

The figures show a huge number of mortgage accounts, at 120,614, have been restructured so far.

The Central Bank said almost 88% of all restructured mortgages were meeting their new terms. However, 78% of restructured cases involving capitalisation of arrears and 95% of split mortgage deals were meeting the terms of the new arrangements.

Arrears capitalisations and split mortgage deals account for over half of all the types of restructured mortgages.

Paul Joyce, senior policy adviser at the FLAC — the organisation that manages the Free Legal Advice Centres — said that write-downs of the mortgage capital were conspicuous by their absence from the long list of types of restructured mortgages.

“The whole system by and large is designed for banks from having to write down the value of the outstanding mortgage,” Mr Joyce said.

Mortgage arrears and mortgage debt remain a huge problem, he said, highlighting the number of accounts at 34,980 which are in arrears for over two years.

“It has been presented the arrears problem has been put to bed by restructuring. It has not,” Mr Joyce said.

Eugene McErlean, a banking expert who has advised the Independent Alliance TDs on mortgage arrears, also said the number of accounts in arrears of over two years showed the scale of the problem.

Mr McErlean said he wants banks to be set “more realistic” targets and would welcome more legal support for distressed borrowers.


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