60,000 struggle with mortgages
Scale of debt problem is hugely underestimated, say homeloan experts
CLOSE to 60,000 people are struggling to pay their mortgage, the Irish Independent has learned.
New figures from the Financial Regulator released yesterday show 28,600 homeowners are now in arrears and have been unable to pay their mortgage for three months or more.
But mortgage experts last night insisted these figures grossly understate the extent of the mortgage debt crisis and claim another 30,000 homeowners have been forced to reschedule their mortgage before going in to arrears.
These people have either switched to paying interest only, have taken a payment holiday or renegotiated their mortgage terms. A spokesman for the regulator confirmed its mortgage arrears figures do not include homeowners who have been forced to reschedule their mortgage.
Also, a number of banks have admitted they do not include customers who have renegotiated their mortgage deal in the Financial Regulator's arrears figures. A spokesman for AIB confirmed that customers who reschedule payments are not classified as in arrears unless they miss a payment. The director of the Irish Mortgage Corporation, Frank Conway, and the housing charity Respond, said the numbers of people struggling to meet their mortgage payments was double the 28,600 arrears figure from the regulator.
Mr Conway warned the situation will worsen as lenders are set to hike standard variable and fixed rates across the board. AIB warned on Tuesday that it will increase its standard variable rate by 0.5pc by the summer. Permanent TSB yesterday said 7,000 of its 200,000 mortgage customers are in arrears.
Arrears on home loans worsened in the first half of 2009 with the big increase in unemployment, Irish Life and Permanent said.
But the rate of arrears moderated in the second half of last year and the group said it expects arrears in the Irish loan book to peak this year. The regulator's figures show close to 4pc of residential mortgages had been in arrears for more than three months at the end of 2009.
Finance Minister Brian Lenihan said the rate of increase in mortgage arrears was slowing down. He also welcomed the fact there were fewer court proceedings initiated, which he said was due to homeowners negotiating with their lenders. House repossessions rose by 20pc in the last three months of last year, compared with the previous three months. Lenders ended up with 400 repossessed homes on their books at the end of last December, up from 331 at the start of last October. Some 27 houses were repossessed during the final three months of last year, while 74 were voluntarily surrendered to lenders, the regulator's figures show.
Of the 28,600 mortgages in arrears for three months or more, some 19,185 were in arrears for six months or more.
The numbers in arrears for three months or more has gone up by 8.9pc, while there has been a 8pc rise in the numbers in arrears for six months or more. The data shows that at the end of December there were almost 793,000 mortgage accounts in Ireland with a combined value of €118.3bn.
The 28,603 mortgages in arrears equates to 3.6pc of all residential home loans
Some €5.33bn was owed on the accounts which were in arrears for more than three months.
According to the figures, just over 5,000 formal demands to repossess a house have been issued by mortgage lenders, representing an increase of 12.6pc since the end of September 2009.
Additionally, there were 3,200 cases where court proceedings had been issued to enforce a mortgage contract, compared to 3,300 cases at the end of September.