Thursday 23 March 2017

Troubled homeowners top 100,000 for first time

Picture posed. Thinkstock
Picture posed. Thinkstock

Charlie Weston Personal Finance Editor

MORE than 100,000 people are now struggling to repay their mortgages, figures to be released by the Central Bank today are set to show.

This is made up of around 62,000 homeowners in arrears of three months, or more, and just less than 40,000 who have restructured their repayments, sources have indicated.

It is the first time that the number in trouble with their mortgages has breached the 100,000 figure. This is the equivalent of the population of Kilkenny city and county.

Banks have claimed there has been a spike in arrears because some people have stopped paying their mortgages after expectations were raised during the summer of debt-forgiveness deals.

But other banking sources have dismissed this, saying rising unemployment and people exhausting their savings were the main reasons for the spike in the number of households in mortgage distress.

Today's figures for July, August and September are also set to show a lower number of restructured mortgages than the last time figures were issued after a leading lender admitted to the Central Bank it has been double counting.

Lower

This means that the number of modified mortgages, where the borrower is not in arrears, is set to be little changed from the June figure of under 40,000.

Most people who get a deal to restructure their mortgages go on interest-only in order to lower the monthly repayments.

Operations manager with Irish Mortgage Brokers Karl Deeter, said distressed mortgage-holders needed more state help.

"We have now breached the critical 100,000 mark in terms of troubled mortgages. The time for talking about this problem is over," he said.

Bank of Ireland, KBC Bank and Permanent TSB said in the past week that higher arrears levels were because of expectations of mortgage-debt write-off deals.

Now that the Government has produced its working paper on mortgage solutions, the Keane report, there is likely to be less speculation about debt forgiveness, experts said.

The likelihood is that there will be another three cuts in ECB rates which should benefit most mortgage holders.

Most lenders passed this month's ECB rate cut to variable-rate mortgage-holders, although Ulster Bank, Bank of Ireland and Start Mortgages are holding out.

Lower ECB rates should mean fewer people going into arrears although the expectation is that arrears will continue to rise for a while yet.

Meanwhile, EBS has decided to re-introduce fixed-rate mortgages after closing off the option for its customers in February.

The lender is offering existing customers a rate of 5.35pc over three years, and 5.75pc over five years. The rates for new customers are slightly lower.

EBS has one of the higher variable rates at 4.68pc.

And Bank of Ireland insisted yesterday that its market share of new mortgage lending has increased to over 50pc of the overall market.

Irish Independent

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