Mortgage crisis gets worse with 36,500 now in arrears
Published 02/09/2010 | 05:00
A sharp rise in the number of families unable to repay their mortgages was being seen last night as a sign the mortgage crisis is worsening.
The number of homeowners who are three months or more behind on their repayments surged to almost 36,500 in June.
Financial experts said the shocking figures showed that thousands of households were now stuck in a financial quagmire.
The figures from the Financial Regulator showed that the numbers of families in arrears for three months or more jumped by more than 4,000 in the three months to June, compared with the first three months of the year.
Three-quarters of those in arrears have not paid their mortgage for six months or longer. The rate that people are going into arrears is now accelerating, with expectations that the mortgage mess is set to spiral further out of control in the coming months.
The latest figures take no account of a mortgage rate rises pushed through by six different lenders in the past few weeks.
Some of the recently reported hikes in standard, variable and fixed rates only took effect from yesterday.
And mortgage market observers maintained that the regulator's arrears figures massively understate the true extent of the home-loan trauma already being experienced by families.
Another 70,000 mortgage holders are estimated to have gone into their lender to do a deal on reducing their repayments before getting into arrears.
This means that well over 100,000 homeowners may be struggling to repay their mortgage. Job losses, pay cuts, tax hikes and overborrowing have meant that many families are under severe pressure to meet their monthly repayments.
The regulator's figures also do not show up the number of families in which the main breadwinner has lost a job and savings are being used up to pay the mortgage.
The figures also do not show the numbers who are in arrears for less than three months.
Financial adviser Karl Deeter, of Irish Mortgage Brokers, said: "The growth in arrears as well as the rate of growth in the arrears is heading only one way. Sadly, our only growth industry in 2010 is that of debt deterioration."
Frank Conway, of Irish Mortgage Corporation, said thousands of families were now bogged down in a financial quagmire.
"As we have seen over the last 12 months, banks are doing all they can in order to survive and increasing interest rates in the middle of a deep recession has not only been counter-intuitive, it is proving to be counter-productive.
"Banks should now reverse some of their interest rate increases to give those most vulnerable some financial breathing space."
The figures show that 387 homes were repossessed in the past year. A total of €6.9bn was owed in relation to all accounts more than 90 days in arrears, of which €4.8bn was owed for accounts more than 180 days in arrears.
The Central Bank says that by the end of June, there were over 789,000 private residential mortgage accounts in Ireland, which were worth almost €118bn.
The Irish Banking Federation said that, although the overall percentage of mortgages in arrears had increased, the level of home repossessions by mainstream lenders remained low. It added that the number of repossessions during the second quarter of 2010 had fallen for the third consecutive quarter to 86.