Advisers shocked at rise in early-stage mortgage arrears

David Hall: Banks will not deal with 'families in deep arrears'.

Official figures have shown a second successive quarterly increase in homeowners falling into early-stage arrears, with one in 10 households now behind in their mortgage payments.

The Central Bank figures showed accounts in arrears for up to 90 days rose to 23,322 at the end of March, even as all other categories of longer-term arrears fell.

Overall, the figures show a further steady fall in the number of mortgage accounts in arrears, to 76,422, representing about one in 10 of all home mortgages. Of those, more than 53,000 — or 7% of all family home mortgages — owe more than three months repayments.

But early-stage arrears have now risen for two straight quarters when indicators such as economic growth and surging house prices suggest arrears cases should be falling sharply.

Head of policy at the Free Legal Advice Centre (Flac), Paul Joyce, said it showed many people were still facing hardship and struggling to pay their mortgages.

“The characterisation of mortgage arrears as a long-term arrears problem is fundamentally questionable,” said Mr Joyce.

The prospect of interest rate increases in the next few years should be “very scary” for all arrears cases, he said.

Mr Joyce said figures showing that 13% of restructured mortgages have failed should raise alarm bells.

Eugene McErlean, an expert on the banking industry and corporate governance, said he believed the regulator “had taken the eye off the ball” over early-stage mortgage arrears. Failures in restructured mortgages were “a red flag that there is a problem”, Mr McErlean said.

David Hall, head of the Irish Mortgage Holders Organisation, said banks continue to refuse to deal with “families in deep arrears”.

“I’m like a broken record at this stage warning about those in deep arrears,” said Mr Hall. “Progress in resolving these cases is pathetically slow and the blame for this lies firmly at the door of banks and vulture funds who simply will not accept the need to write off the mortgage debt that they will never recover and allow these families remain in their homes.”

Michael McGrath, Fianna Fáil’s finance spokesman, demanded more be done to resolve “the stubbornly high number of long-term arrears cases”.

“Several years into this crisis, it is remarkable that 65% of all family home mortgages in arrears have still not been restructured,” he said. “With 33,000 family home mortgages in arrears of two years or more, the Government and the Central Bank need to place a greater emphasis on resolving these cases.”

The Central Bank said almost 18,000 mortgages for both family homes and buy-to-let borrowings, are in the hands of “unregulated loan owners”. About 7,500 of these are in arrears of almost two years or more.

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