Thursday 29 September 2016

First decline in long-term mortgage arrears cases

Published 12/12/2015 | 02:30

A total of just over 92,000 homeowners are in some form of arrears. This represents around one in eight of all residential mortgages. Picture posed
A total of just over 92,000 homeowners are in some form of arrears. This represents around one in eight of all residential mortgages. Picture posed

THE number of mortgage holders who are more than two years behind on their repayments has fallen for the first time.

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The new figures come as Central Bank research shows that those in long-term arrears are more likely to have expensive variable rate mortgages, be divorced and have lost their jobs.

The number of homeowners in long-term mortgage arrears dropped by 720 cases.

It is the first time that the numbers that are more than two years behind on their repayments fell since the Central Bank started recording arrears at the end of 2012.

A total of 37,269 residential mortgage holders were in arrears for more than two years by September.

The development has prompted hopes that the mortgage arrears crisis may finally be coming to an end.

It comes just weeks after former Central Bank Governor Patrick Honohan said the inability to deal with the mortgage arrears problem more quickly was his biggest regret.

"One of the things that I was very anxious to do was to have the mortgage arrears problem sorted more quickly, the triage between people where a deep restructuring of the loan was appropriate and where that wasn't possible, and there would have to be repossessions," he said when he retired last month.

The figures show there has been a fall in the numbers who are in arrears for a variety of different lengths of time.

A total of just over 92,000 homeowners are in some form of arrears. This represents around one in eight of all residential mortgages.

And there was a fall in the numbers who are more than 90 days behind on their repayments - the standard international measures for arrears.

There were 65,584 owner-occupier mortgages in arrears for 90 days or more at the end of September.

A total of 120,806 of mortgage accounts were classified as having been restructured by the end of the three months under review, a slight increase.

And 30,288 buy-to-let mortgage accounts were in arrears. The number in arrears represents 22pc of investor mortgage accounts.

Meanwhile, the Central Bank also released two academic papers showing those in long-term mortgage arrears are more likely to have lower incomes.

These people are also likely to have big mortgages relative to their earnings.

Unemployment and divorce are also key factors leading people to end up missing mortgage payments for more than two years.

People in longer-term mortgage arrears are also tend to have expensive variable rate mortgages.

The studies show troubled borrowers typically have a lot of other debts such as high credit card balances and car loans.

Borrowers with long-term mortgage arrears are typically "vulnerable family types" such as single borrowers with multiple children.

Repayment rates are very low among those borrowers with long-term debts.

Irish Independent

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