Sunday 4 December 2016

Home repossessions will soar as 6,400 are in arrears

Charlie Weston Personal Finance Editor

Published 19/01/2010 | 05:00

AN avalanche of repossessions is now expected after new figures show close to 6,400 people stopped paying their mortgages more than a year ago.

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The number who have failed to pay their mortgages for a period of 12 months or more is three times the level it was at a year ago. These homeowners are now almost certain to have their homes repossessed.

Pressure

And struggling homeowners face renewed pressure from next month, which will be the first time Bank of Ireland and AIB will be able to begin new legal proceedings against homeowners who have failed to pay their mortgage for a year.

A moratorium agreed with the Government forced the banks to wait a year before starting legal action to repossess homes from those who failed to pay their mortgages.

Many of the 6,400 people at dire risk of losing their homes should not have been given their mortgages as they had no hope of repaying them, mortgage experts said.

These bad lending decisions by banks and building societies will have to form a core part of any inquiry into the banking system, the detail of which is due to be announced by the Government today.

The new figures came as the High Court granted 12 possession orders against property owners -- including one investor who lost seven properties as a result of outstanding debts of €2.3m.

Ireland's largest banks, including Bank of Ireland, AIB and Ulster Bank, were among the lenders seeking repossession orders against property owners and investors who have fallen into arrears.

The numbers in mortgage difficulty are likely to escalate over the coming months as funds-starved lenders prepare to hike mortgage rates.

The new figures emerged in a report on the Irish mortgage market by the credit rating agency Moody's, which said that in November some 0.8pc of residential mortgages had not been paid for 360 days or more. This works out at just short of 6,400 mortgages.

There are some 791,000 residential mortgages outstanding in Ireland, according to the Financial Regulator.

More than 26,000 of these homeowners are in arrears of three months or more, the Regulator said just before Christmas. It said 17,767 have not paid their mortgage for six months or more. But the figures did not say how many homeowners had gone a year without making a payment.

Almost one home a day was repossessed last year.

The revelations come at a time when Permanent TSB is poised to hike its standard variable mortgage rate by 0.5pc. Other lenders are expected to quickly follow.

Banking analysts said yesterday that this was likely to be followed by another 0.25pc rise.

Hikes

Karl Deeter of Irish Mortgage Brokers said the hikes in standard variable rate mortgages were likely to prove to be a tipping point for many mortgage holders.

Senior researcher with the Free Legal Aid Centres Paul Joyce said that the new figures on those a year in arrears were disturbing.

Some 331 houses were repossessed last year, but end-of-year figures show that almost 1,000 new repossession orders were initiated in the High Court -- a 27pc increase on 2008.

Irish Independent

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