Most vulnerable likely to face long-term mortgage arrears

The country’s most vulnerable households are significantly more likely to be in long-term arrears on their mortgage payments, a Central Bank report reveals.

The research throws light for the first time on the long-overlooked plight of the large numbers of households still facing high levels of mortgage distress eight years after the banking and property collapse.

“The 2014 numbers show that despite an improving economy the transition rates into arrears have remained close to those seen in a more distressed economy in previous years,” said the report’s authors, Robert Kelly and Fergal McCann of the Central Bank.

Their research also shows households with long-term arrears are more likely to live in the midlands, the border counties, the mid-east and the south-east.

Households in Dublin, the south-west, and the western regions are less likely to be in long-term arrears.

Key findings include that long-term arrears are more prevalent among those households where families have experienced an unemployment since first taking out the loan; those having experienced a divorce since taking out the loan; or are single borrowers with three or more children.

People in arrears are also more likely to have lower take-home income and higher mortgage debt costs, “suggesting that the extreme shock experienced in the Irish housing market has played a role in the current arrears crisis”, say the researchers. Central Bank figures published separately show a large number of mortgage accounts still in arrears, despite the numbers facing long-term arrears falling for the first time.

There were 92,291 home-loan accounts in arrears at the end of September, down from 98,155 in the previous quarter. The numbers in arrears of more than 90 days also fell, to 65,584, and the number of long-term arrears, of more than 720 days, fell to 37,269 from 38,043.

People can move out of long-term arrears if they strike a restructuring deal with their lender, which includes switching to an interest-only mortgage or extending the maturity of the loan.

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