Negative equity homes are almost €50bn in debt

The debt level of homes which have plunged into negative equity has hit almost €50bn, figures from the four big banks reveal.

Central Bank governor Patrick Honohan made public the scale of the mortgage misery which the main lenders are locked into as they came under renewed fire for sending out letters threatening repossession rather than offering sustainable solutions to customers.

Latest Central Bank estimates show all four main banks have a majority of owner-occupier mortgages now in negative equity.

AIB, Bank of Ireland, PTSB and Ulster have a combined outstanding balance on owner-occupier mortgages in negative equity of €49.15bn.

The level of exposure of negative equity on the banks books ranges from 51% of owner-occupiers now living in a home worth less than they paid for it with Bank of Ireland, to 63% in the case of Ulster Bank.

AIB, which includes EBS, has the highest gross total of €17bn worth of mortgages in negative equity, with Bank of Ireland having the lowest of €10.4bn.

Prof Honohan revealed the figures in a letter to Oireachtas finance committee chairperson Ciarán Lynch who expressed concern about the level of debt exposure.

“The figure is a stark signal that reflects the continuing fall out from the property bubble. What it demonstrates is that sustainable and long-term solutions for distressed home owners need to be a priority and the targets for the banks fulfilled.

“And this can only be done in that situation when home owners are provided with solutions that allow banks to not just meet obligations, but that gives those homeowners some light at the end of the tunnel that they can work their way out of their debt problems,” Mr Lynch said.

It was not good enough for banks to claim they had offered durable solutions to home owners by issuing thousands of letters threatening to set the ball rolling for repossession as has been the practice throughout this year.

“Letters to customers containing proposals for voluntary surrender or repossessions are not sustainable solutions.

“The banks have been targeted with providing solutions in 50% of distressed cases by the end of the year and the finance committee will be bringing them back in to scrutinise how they are doing that.

“The banks need to engage with distressed customers and meet their obligations, but this needs to be done through affordable solutions, so that there is still disposable money available to be spent in the wider economy,” Mr Lynch said.

The Labour TD expressed concern at the level of the amount of owner-occupier mortgages now in negative equity. “This represents a very strong exposure by home owners and the wider economy itself. It is essential that long-term solutions are brought-in so that exposure does not become reality.”

Weekend reports suggest the Government is developing a plan to fast-track the repossessions of buy-to-let and investment properties. The new model will be based on the highly successful Commercial Court.


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