Latest figures from the Central Bank show 14% of all residential mortgages, representing close to 108,000 homes, are either in arrears for more than three months or have been restructured, meaning that interest-only or extended repayment periods have been agreed with lenders.
However, the true scale of the crisis is even greater as the figures do not include homeowners who are so far just one or two months in arrears, or those who bought second homes as investments.
In addition, more than half of the restructured mortgages are in arrears and the vast majority of arrears on all mortgages have been accumulating for longer than six months.
And while actual repossessions have been relatively low with under 1,000 concluded to date, banks and building societies are still piling on the pressure with 12,500 mortgage holders currently facing court proceedings or an initial formal demand for full repayment of a mortgage or forfeiture of their home.
Fears are growing that the interest rate cuts announced by the European Central Bank at the end of last year, and the Government’s planned personal insolvency legislation are too little, too late to prevent mass mortgage default in the coming years.
David Hall of New Beginning, the voluntary legal group helping to fight repossessions, said: “The real concern remains the almost complete absence of medium and long term solutions to this huge social and economic problem.” He said the pending personal insolvency legislation would only work if lenders recognised their culpability in the crisis and were willing to take a share of the pain needed to remedy it.
That view was echoed by Free Legal Aid Centre director Noeline Blackwell who said: “There is a danger that because they are predictable, we are no longer appalled by the continually rising number of family home mortgages in trouble. This needs an urgent, comprehensive solution.”
Ciaran Phelan, chief executive of the Irish Brokers Association, said the growth in long-term arrears, up 69% in one year, was “alarming”. “It would appear that the banks are waiting for homeowners to fall into arrears before agreeing to any form of restructuring. This would not appear to be in the homeowners’ best interest.”
The Irish Banking Federation said lenders were working with distressed borrowers but added any new scheme of debt resolution would have to be balanced in recognising the position of creditors as well as the difficulties of borrowers.