Mortgage arrears: 34,000 family homes miss at least three payments

There are still 47,000 family homes in mortgage arrears with 34,000 missing at least three payments, the Central Bank will tell TDs today.

The Central Bank’s top management, including Governor Gabriel Maklauf, will appear before the Oireachtas Finance Committee.

The officials will make clear that a large number of mortgages remain in distress.

“About 47,000 principal dwelling households (PDHs) are still in mortgage arrears, of which 34,000 have missed at least three payments and are 90 days or more past due. This is a source of deep stress for the families and individuals concerned,” Gerry Cross, Director, Financial Regulation – Policy & Risk at the Central Bank will say.

He will say that when a borrower is offered an alternative repayment arrangement (ARA), it must have realistic potential to resolve the arrears. Lenders should also review and enhance their approach to dealing with personal insolvency practitioners.

The Central Bank is “concerned” about the impact of inflation, saying the war in Ukraine is having a “material impact” on the Euro area, Governor Gabriel Maklouf will say today.

As a member of the ECB, he will say Ireland will take whatever action is needed to fulfil the ECB’s mandate to pursue price stability to combat high rates of inflation.

Mr Maklauf will acknowledge that many people are feeling financial pain, particularly in their energy bills.

“We are concerned at the impact of inflation. From a euro area perspective, as a member of the Governing Council of the European Central Bank, the experience in Ireland is similar to that across member states, and indeed across the globe,” he will say.

As for the economic consequences of the war in Ukraine, it is too early to give a definitive view, TDs will be told.

Mr Maklauf will say the war clearly represents a significant challenge to the outlook for inflation and growth and adds new uncertainty to what had started to become a less uncertain picture. 

“The war is likely to have a material impact on economic activity and inflation in the euro area. But in some countries, including Ireland, the effects will be more indirect than for others although that does not mean they will be insignificant,” he will say.

Overall, the Central Bank will say the economy overall has proven resilient through Covid-19 and, prior to the war in Ukraine, robust growth was expected over the coming years. A major factor behind the resilience of the economy in Ireland, and across Europe and further afield, has been the support provided by governments and policymakers to mitigate the effects of the pandemic.

Regarding inflation, according to the latest available data, Mr Maklauf will say consumer price inflation in Ireland rose to 5.7% in February 2022. This is the highest rate of inflation since late 2000 and is in stark contrast to the experience over the decade preceding the onset of the pandemic when inflation averaged 0.5%.

The Committee will be told that the current rates of inflation are driven by higher global energy prices and supply bottlenecks, with some knock-on implications of the energy price rise for the prices of other consumer goods and services. 

“And it should be noted that these increases in official consumer prices for energy and fuel are yet to reflect in full the developments of recent weeks and the implications of the conflict in Ukraine. Nor do we understand yet the full impact of the latest increases in Covid case numbers across the world,” the Governor will say.

In a later session, Mr Cross will say Ireland like most of Europe has seen a massive rise in electronic payments in the past four years, largely escalated by the Covid-19 pandemic.

“In Ireland, as across Europe, some of the biggest changes in financial services have been seen in the area of retail banking and payments. For example, in the area of payments and e-money firms we have seen the number of authorised firms grow by an order of magnitude – from low single digits to over 40 - in four years, with a significant further number currently in the approvals process,” he will say.

He confirmed that the ban on the policy of insurance companies charging existing customers higher premiums compared to new ones will be banned from July 1.

“This ban will benefit consumers by removing any loyalty penalty for consumers of long tenure. In order to support switching and competition in the market, new customer discounts will continue to be allowed,” he will say.