ARREARS on buy-to-let mortgages are running at twice the level seen on residential mortgages, the Central Bank confirmed today.
Mortgage arrears on buy-to-let properties are now at 29pc which implies that landlords with debts of around €10bn have not been paying back the money they owe on their investments for at least three months. The rate for residential mortgages is 14.7pc.
Problems with buy-to-let mortgages have not previously been included in official statistics. New figures due to be issued next week that will include buy-to-lets for the first time are likely to confirm the preliminary figures released today and similar figures released in a speech by a Central Bank official earlier this month.
Buy-to-lets are a feature of the Irish property market and affect many ordinary people who speculated during the boom by buying one or two houses. This speculation means that many people who are earning good salaries are no longer solvent and helps to explain why the property bust here has had such terrible effect on so many people who would otherwise not be affected by the bust.
The Central Bank added in a report on the economy that banks must face up to the problem of distressed debt in a more efficient way. This could damage the banks’ balance sheets in the short-term but made sense in the long-term, the Central Bank added.