Mortgage crisis despite fastest growing European economy

Ireland remained Europe’s fastest growing economy last year after expanding at a pace not seen since the heyday of the Celtic Tiger 15 years ago.

However, as the economy’s resurgence continued apace, mortgage arrears figures showed the recovery is doing little to help tens of thousands of people failing to meet their repayments.

The number of mortgage holders in long-term arrears of more than two years remains stubbornly high despite the rapid pace at which the economy is growing; echoing the disparity between the statistical recovery upon which Fine Gael based its election campaign and the financial reality of many voters.

At the end of last year, more than 36,000 owner-occupier mortgage holders were mired in arrears of two years or more.

Experts believe those in such long-term arrears now have little or no prospect of repaying their debt.

The average level of arrears among that cohort of borrowers has climbed by more than €5,000 to just shy of €57,000 in the past year, according to Davy Stockbrokers chief economist Conall Mac Coille.

David Hall, chief executive of the Irish Mortgage Holders Organisation, warned many of the 36,000 owner-occupiers in arrears of more than two years are at risk of homelessness in the absence of safeguards.

“These mortgage holders are at imminent risk of repossession and homelessness. The reality is that they will never be able to repay these mortgages but in the absence of a functioning mortgage-to-rent system and given the dysfunctional private rental market there is a significant risk that many of these families will be facing emergency accommodation or homelessness,” Mr Hall said.

Merrion Capital chief economist, Alan McQuaid agreed that many mortgage holders had little or no chance of repaying their debt despite GDP figures continuing to surge ahead.

“Things are improving generally across the country but I suppose certain people are never going to be fixed no matter how well the economy is growing — it won’t make one iota of a difference to those people,” said Mr McQuaid.

There was, however, good news for thousands of Irish mortgage holders yesterday as the European Central Bank cut interest rates to zero which will benefit those on tracker mortgages.

Association of Expert Mortgage Advisers director Ken Murray said the move would see about €5 extra per month in the pockets of tracker customers which account for half of all mortgages in the country.

However, it also means the chasm between tracker and standard variable rates continues to grow with little hope of good news for the latter half, Mr Murray added.

Business: 17&18