Owner-occupier long-term arrears rise again

The number of owner-occupiers sliding deeper into arrears who now find themselves two years or more behind on their repayments has increased for the 11th consecutive quarter.

Latest Central Bank figures show 38,041 mortgage holders living in their homes are now in arrears of 720 days or more.

This compares to the first quarter for which similar figures are available, in September 2012, when 20,622 owner-occupiers were in long-term arrears of this length.

Consequently, the number of distressed borrowers in this category has continued to swell for a period stretching back 33 months.

In light of the figures, greater emphasis and resourcing needs to be given to measures designed to keep families in their homes, according to Irish Brokers Association chief executive Ciaran Phelan.

“With those homeowners in arrears of over two years now carrying 80% of all arrears in monetary terms, it’s clear we need to move on from forbearance measures and concentrate on solutions for the 38,000 families and individuals in this group.

“The minister [for finance, Michael Noonan] needs to put some funds into the mortgage to rent scheme, as this appears to be the only viable option at this stage that will enable homeowners to remain in their homes.”

Combining the number of owner-occupier and buy-to-let borrowers in arrears of over 720 days, the number also climbed in the second quarter of the year.

Some 5% of owner-occupiers and 11.1% of buy-to-let borrowers are in arrears of over two years, a total of 53,317.

The over-90-day owner-occupier arrears rate declined to 9.3%, down from 9.8% in the first quarter of the year, however, while the buy-to-let rate fell by 0.7% to 19% in the same period.

The Irish Mortgage Holders Organisation warned the latest statistics should act as a warning of the “catastrophic levels of homelessness” the country could experience if the arrears situation is not addressed.

“The failure of the mortgage to rent [scheme], the banks’ unwillingness to introduce effective long-term and fair solutions, the pathetic level of insolvency arrangements and the uncertainty of changes to the term of bankruptcy from three to one year are all causing great uncertainty for many in arrears,” IMHO chief executive, David Hall said.

The minimal contribution of insolvency arrangements continues to hamper progress in reducing arrears.

Data from the Insolvency Service of Ireland (ISI) indicates a growing but still grindingly slow take-up of arrangements, of which many more are hoped can be achieved on the back of recent changes.

Announced in May, these include empowering the courts to overrule banks on debt deals and the extension of the mortgage-to-rent scheme to homes worth up to €350,000 in Dublin from the previous limit of €220,000, in order to open the solution up to a greater number of distressed borrowers.

On a more positive note, the number of successful restructures grew in the second quarter of the this year with 73% of modified loans not in arrears, an increase on the 53% seen in 2013.

Buy-to-let modifications totalled 26,004, of which 18,268, or 70%, were not in arrears.

Split mortgages and arrears capitalisations represented the strongest rise in modifications of the quarter.


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