Courts 'too lenient' in pursuing mortgage-holders in long-term arrears
The Irish Banking Culture Board was responding to new data from the Central Bank which suggested over half of mortgage holders in long-term arrears made no repayment towards their mortgage in 2020 or 2021. File Picture: iStock
Mortgage-holders in arrears for over a decade without attempting to pay back what they owe are “gaming the system”, a member of the Irish Banking Culture Board has said.
Financial advisor Padraic Kissane was responding to new data from the Central Bank which suggested over half of mortgage holders in long-term arrears made no repayment towards their mortgage in 2020 or 2021.
“I think the courts are too lenient to people in granting stays and granting repossession orders,” he told RTÉ’s Morning Ireland. “And if a bank can’t recover its assets, we then wonder why Ulster Bank and KBC are leaving the market."
According to the Central Bank data, the average outstanding balance of accounts making no repayment in 2021 was €240,410. The majority of these were more than five years in arrears.
Just over one-in-five (22%) of accounts in arrears were paying something back towards their mortgage in 2021, but what they were paying was less than half of the contract amount they should have been paying.
At the end of 2021, lenders had classified 55% of all accounts in long-term arrears, or 15,000 accounts, as “not co-operating". This was down from just under 16,000 at the end of 2020.
The Central Bank data suggests that 4,237 of these mortgage-holders are in arrears for 10 years or more and are paying 0% back to the financial institution.
Mr Kissane added: “It has an add-on effect as well, but particularly on people that make their efforts. People come to me every day about how can they afford mortgage, when they’re borrowing. And here you have people paying nothing to a mortgage. It’s not fair.
The Central Bank’s director of consumer protection, Colm Kincaid, said the overall trend is that the number of accounts in long-term mortgage arrears “continues to decline”.
“In the 12 months to June 2022 we saw a further decrease of 12%,” he said. “For the first time since the Central Bank started its data collection on mortgage arrears, long-term mortgage arrears have fallen below 25,000 accounts.”
Mr Kincaid said the data suggests that solutions can be found even in cases where a customer has been making low repayments over a long period of time.
“It shows that by working together within a defined regulatory framework there can be solutions that work for both borrowers and firms, even in cases of borrowers with low affordability and arrears that have lasted for a number of years,” he said.
“We will continue to scrutinise lenders’ progress against their plans and targets in the months and years to come. [But] for borrowers in or facing arrears the message remains to engage with your lender even if you are in deep arrears or have been in arrears for a prolonged period. You can also seek out the support and advice of organisations such as MABS where you want help or independent advice to support you.”
