Mortgage restructuring does little to ease crisis

Restructuring of mortgages has done little to solve the mortgage crisis as more than half of all borrowers still cannot afford to meet repayments after their loans have been restructured.

New figures released by the Central Bank show that nearly 80,000 mortgages, with a total value of over €14bn have been restructured, but 41,000 mortgage holders have been unable to meet the restructured payments.

The most widespread means of restructuring has been moving to an interest-only payment. Nearly 28,000 mortgage holders have switched to interest-only payments.

Overall, one in 10 mortgage holders in Ireland are in arrears. The figures show that there has been a 10% increase in the numbers in arrears of 90 days or more, while 15% of all mortgages have either been restructured or are in arrears.

At the end of March, there were 764,138 private residential mortgages in Ireland; 77,630, or 10.2%, were in arrears of more than 90 days. This increased from 70,945 in Dec 2011.

Chief economist at Goodbody Stockbrokers Dermot O’Leary said: “Mortgage debt is the biggest problem that the Irish economy will face over the next couple of years and there is no sign this is getting any better.”

As more people struggle to meet their repayments, there has been an increase in the number of homes being repossessed by the banks, up by 27.8% since December.

During the first quarter of the year, 65 homes were repossessed on foot of a court order, while 105 were voluntarily surrendered or abandoned to the banks. The banks now have 961 homes that have been seized or abandoned since the crisis began.

Director of public affairs with the Irish Banking Federation Felix O’Regan said the figures were not that surprising. The current situation was just a continuation of the difficulties seen in 2011 evolving into long-term problems.

Mr O’Regan warned that the Government’s planned personal insolvency plans could have a huge impact on the banks’ balance sheets and affect their ability to repay taxpayers who bailed them out.

“The fundamental position of the banking sector on the proposals for a personal insolvency regime remains that, should secured debt be included, it is done in a way which will mitigate against unintended consequences and so minimise the impact on banks’ balance sheets,” said Mr O’Regan.

Meanwhile, New Beginning, the not-for-profit group which has been helping struggling mortgage holders battle a tide of home repossessions, is to open a specialist insolvency service in the summer.


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