Irish News

Tuesday 22 July 2014

Banks not offering long-term deals on mortgage arrears

Charlie Weston Personal Finance Editor

Published 03/04/2013|04:00

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BANKS are on a collision course with regulators after it emerged that few of them are offering long-term solutions to mortgage holders in trouble.

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Almost half of the lenders are not offering split mortgages, one of the key solutions promoted by the Central Bank to help those in mortgage arrears.

And two of the six banks singled out by the Central Bank to start offering long-term solutions to half of their customers in arrears by the end of the year are among those not offering a split mortgage, an Irish Independent investigation has revealed.

Split mortgages have been championed by the Central Bank as a potential solution for those unable to meet their monthly repayments.

They work by setting aside, or warehousing, a lump of the mortgage for a number of years, to cut monthly repayments.

But Ulster Bank and KBC Bank do not offer this to their customers in arrears, despite being among the six banks facing financial sanctions if they do not offer "sustainable" long-term solutions to those in trouble with home loans by the end of the year.

Split

Other banks yet to offer split mortgages include Bank of Scotland/Ireland and IBRC, which is in liquidation but controls the mortgages issued by Irish Nationwide and Anglo Irish Bank.

Australian lender Pepper, which has bought the mortgage book of GE Money, has yet to offer split mortgages but is offering a range of other long-term deals.

Ulster Bank insisted that it has a range of options available to those in mortgage trouble, but did not answer any of eight survey questions on what exactly it offers distressed borrowers.

The bank does not offer a mortgage-to-rent option, or split mortgages. Meanwhile, KBC Bank said it was testing split mortgages, mortgage-to-rent and negative equity trade-down mortgages.

A spokesman for the special liquidators to IBRC would not outline if it is offering any long-term arrangements to those in mortgage trouble.

Last month the Central Bank told AIB/EBS, Bank of Ireland/ICS, Ulster Bank, Permanent TSB, KBC Bank and ACC they will have to have offered half of their customers who are in extensive arrears mortgage deals before the year is out. If they do not, then they will face financial penalties.

Arrears solutions outlined by the Central Bank and Finance Minister Michael Noonan included long-term interest-only deals, split mortgages and interest rate reductions.

Almost 100,000 residential mortgage accounts are three months or more in arrears. Of these, close to 25,000 are two years or more behind on their repayments.

Irish Independent

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