Nearly 30,000 struggling householders are battling to cope with more than two years of crippling mortgage debt, official figures have revealed.
As the country’s chronic mortgage crisis spirals further beyond control, the Central Bank found nearly a fifth of all residential accounts in Ireland were in some form of arrears, with around 4% in the worst category.
Those homeowners who are at least 720 days behind with their repayments are saddled with average debts of €40,000.
Human rights organisation Free Legal Advice Centres (Flac) warned those accounts are in “deep, dire difficulties” with little hope of clawing their way out of the red unless lenders consider writing down mortgages.
Flac senior policy analyst Paul Joyce said the alternative will be for banks to repossess more properties, leaving thousands facing life on the street.
“How can an account that deep in debt get back to paying the mortgage instalments, let alone start clearing the arrears?” Mr Joyce said.
“Unless the banks put more long-term solutions in place to keep mortgage holders in their homes, we will have a further rise in repossessions.
“But what will these people do, where will they go?”
The number of householders unable to keep up with their repayments is set to crash through 100,000, according to the Central Bank’s residential mortgage arrears and repossession statistics for the second quarter of the year.
Some 97,874 private households – nearly 13% of all residential mortgages – were at least three months in arrears.
That was up more than 2,000 from the end of March.
Some 28,860 customers were in arrears of more than two years – an 11.3% increase from the previous quarter.
The total value of those arrears stood at 1.16 billion euro (£959 million), suggesting average debts of those more than two years behind was around 40,000 euro.
Meanwhile, more than 200 homes were repossessed during the second quarter.
Sixty-three customers had their homes taken away from them on foot of a court order, and 160 were forced to voluntarily surrender or abandon their property.
The amount of repossessions increased significantly from 166 in the first three months to a total of 223 during the second quarter – with the figure set to soar as banks are forced to tackle the worsening arrears crisis.
Mr Joyce said lenders would be forced to decide between offering customers long-term sustainable solutions – such as a write down in the principal mortgage sum – and repossessing the property.
“It’s inevitable that there will be an increase in repossession applications,” Mr Joyce added.
“But we will also have lenders trying to make the judgment call: do we repossess now and take the consequences of potentially making a loss, or do we come to an agreement with the customer in which we get less money back on a monthly basis but it is in our interest in the longer term?”
Banks and the Government have come under increased fire as a result of the deepening crisis.
The Irish Mortgage Holders Organisation said banks had been given “exceptional powers” to force resolution of the arrears and repossession.
“Irish mortgage holders are facing exceptionally turbulent months ahead with many threats of repossession in the offing, psychological pressures and persistent neglect of their plight by the policy makers,” it said in a statement.
The Central Bank recently updated its Code of Conduct on Mortgage Arrears, which included a reduction in the moratorium placed on lenders from starting repossession actions against homeowners.
It also allows them more contact with borrowers.
The country’s six main banks now have targets to reach to have proposed sustainable mortgage solutions to distressed borrowers.
Meanwhile, the Irish Banking Federation (IBF) insisted that more customers will have their mortgages restructured over the coming months.
The Central Bank figures showed that around 77% of restructured private household accounts have been meeting their new repayment terms.
Among the measures taken by lenders to help customers get back on track were offering interest only, reduced payment and term extension plans.
Just over 300 accounts were offered a split mortgage in the second quarter, while 870 took a temporary interest rate reduction.
“Banks continue to work assiduously with their distressed customers to maximise the number of sustainable mortgages and to deal effectively with unsustainable mortgages,” the IBF said.
“And they are working closely with the Central Bank in delivering such solutions within the framework of the mortgage arrears resolution targets.”