Banks to get targets on restructuring mortgages

The Government has agreed strict quarterly targets for banks to restructure distressed mortgages ahead of an expected wave of repossessions.

The move comes as homeowners receive Revenue letters from today about the property tax. A new website allows owners to estimate what they owe.

The Central Bank, financial institutions, and the Government are all expected to announce new targets for mortgage restructuring in the coming days — with up to 20,000 deals expected every quarter.

Figures released by the Central Bank last week showed that, at the end of December, 11.5% of all owner-occupied mortgages and 18.9% of buy-to-let mortgages were more than 90 days in arrears.

Communications Minister Pat Rabbitte said the issue was coming to a head and the Government would outline the plan.

“There really haven’t been any repossessions over the last five years of any significance numbers-wise,” said Mr Rabbitte. “That [plan] will set out targets for the banks because, in interests of getting the economy back to normal, we have to confront this issue.”

Department of Finance secretary general John Moran last week said repossession rates were “unnaturally low”.

Mr Rabbitte said a variety of solutions would be offered to owners, including the option of split mortgages and interest-only payments. He said it was “inevitable” there would be higher rates of repossessions.

This was necessary in the buy-to-let market, where 27% of mortgages were in arrears for more than 90 days, Mr Rabbitte told RTÉ’s The Week in Politics. He confirmed that banks would now have quarterly targets to redraw mortgages.

“There are people living in €5m homes that have taken out buy-to-let mortgages for additional properties,” said Mr Rabbitte. “It’s quite right some of them ought to be repossessed and made sort out the debt problem because otherwise, this is going to run and run for years.”

Junior finance minister Brian Hayes told RTÉ “real progress” was needed but banks would discern between buy-to-let assets and family homes. Repossessions could rise in a small number of cases, he said.

Enda Kenny said last week that measures would be announced soon to speed solutions for troubled owners. It is expected these will include closing a legal loophole that will allow lenders seize more homes. This is also one of the measures required by the troika.


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