Business Property & Mortgages

Saturday 1 October 2016

One in six council mortgages not paid in a year

Published 20/08/2016 | 02:30

Minister for Housing Simon Coveney Photo: Tom Burke
Minister for Housing Simon Coveney Photo: Tom Burke

Almost one in six mortgages issued by local authorities has not been paid in over a year.

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City and county councils are facing a mortgage crisis, with the level of non-performing loans way in excess of that in the private sector.

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Click here to view full-size graphic

New data from the Department of Housing shows that just over half of the 17,700 loans provided to borrowers are considered to be 'performing'. One in four is in arrears of more than 90 days. Almost 3,000 loans have not been serviced for more than a year.

This is in sharp contrast to the level of arrears being grappled with by the main banks, with Central Bank data showing that 11pc of homeloans issued by the pillar banks have not been paid for three months or more.

Families hoping to purchase or build a house but cannot get a loan from the main banks can apply to their local authority for a housing loan.

The money is sourced from the Housing Finance Agency, and interest rates are typically 1.5pc below market norms.

But despite the low interest rate, new figures show that thousands of homeowners are unwilling or unable to repay their loans.

The new data also shows a wide disparity in payments. In two counties - Kildare and Waterford - almost half of all loans have not been serviced for 90 days or more. That drops to one in 11 in Fingal.

It also reveals:

• One in three loans is in arrears of more than 90 days across seven counties - Clare, Laois, Offaly, Longford, Cavan, Sligo and Wicklow.

• Of the €1.028bn in mortgages issued by city and county councils, just €542m - made up of 9,228 loans - is classed by the Department as performing.

• Mortgages valued at €204m (3,624 loans) have not been paid for between one and 90 days; another €49m (940) is in arrears for 90-180 days and €55m (944) has not been paid for 180-360 days.

• Another €62m, comprising 1,028 loans, has not been paid for 360-720 days and €113m (1,932) has not been paid for more than 720 days. These loans represent some 15pc of the loan book.

But despite the high level of non-performing loans, councils are reluctant to repossess properties as it will only force families onto housing waiting lists.

Last year, just 80 were surrendered, 32 of which were voluntary. This compares with 421 seized in the first quarter of this year by banks.

The Department of Housing said it had launched a Local Authority Mortgage to Rent (LAMTR) scheme in February 2014, aimed at helping low-income families whose mortgages were unsustainable and where there was "little or no prospect" of a change in circumstances which would allow the loans to be serviced.

The scheme allows families to stay in their homes, but ownership transfers to the council and the families pay rent to remain.

The most recent figures show that 193 families have benefited from these arrangements.

Their loans total almost €23m.

Separate figures show that councils have issued 66 mortgages totalling €7.5m in the first three months of this year.

In 2015, almost 300 were issued, valued at €32.4m. The number has increased steadily since 2007.

The 'average' price for a property served by a local authority mortgage is €120,000, rising to €360,000 in Dublin.

This compares with €282,000 and €377,000 for loans issued by the main banks and building societies.

Irish Independent

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