Buy-to-let mortgage arrears hit 29%
Of the €32bn in outstanding mortgages, 29% are in arrears by more than 90 days.
The corresponding figure in the residential mortgage sector is 14.7%.
There are 83,251 households in the €112bn residential mortgage market that are in arrears by more than 90 days.
The Central Bank said targets for resolution of unsustainable debt might have to be introduced to ensure that banks stay focused “on the objective of working out their stock of distressed loans”.
It noted a number of initiatives, such as split mortgages, trading down, or mortgage-to-rent options, had been introduced. Moreover, personal insolvency legislation is due to come into effect after Christmas which will provide another roadmap for the banks to work through their massive arrears problem.
Central Bank director Fiona Muldoon last month heavily criticised the banks for “taking a wait and see approach” to the mortgage crisis.
Even though household debt is coming down, so is disposable income. About half of all households have mortgage debt exceeding 2.6 times their gross income, which is higher than the eurozone average.
According to a Central Bank survey, the average of all household mortgage repayments is 20% of gross income. However, given the level of household debt, a rise in interest rates would pose a risk for the household sector, said the bank.
“These figures issued by the Central Bank clearly illustrate that the arrears position is getting worse,” said Trevor Grant of the Association of Expert Mortgage Advisors.
“Even more disconcerting is the fact that these figures do not report those in arrears up to 90 days.”
