Sunday 28 December 2014

Firm took on high-risk cases during boom

Published 14/06/2014 | 02:30

Interest rates as high as 8pc are charged as it took on some of the most high-risk cases during the property boom
Interest rates as high as 8pc are charged as it took on some of the most high-risk cases during the property boom

SUBPRIME lender Start Mortgages is no longer giving out loans, but was a significant player during the boom.

It has been to the fore since due to its high rates of arrears and repossessions.

Interest rates as high as 8pc are charged as it took on some of the most high-risk cases during the property boom.

These were people who could not get a mortgage from a mainstream bank, so were forced to pay high interest rates. The borrowers typically had a damaged credit record.

Often the borrowers consolidated other loans, such as credit card and car loans, into the new mortgage they took out from Start.

Not surprisingly, many of these loans have turned sour over the past six years – a period when average incomes have fallen by a quarter.

The lender will not say how high its arrears are, but it was previously reported that up to 45pc of its mortgages are three months or more in arrears.

It told this newspaper this week that it now has 5,400 mortgages in issue.

Start charges penalty interest of one per cent a month on arrears to borrowers who do not co-operate with it. A charge of €50 is also imposed if a call is made to the home of a borrower in arrears.

The Dublin-based lender is owned by UK-based subprime lender Kensington, which is in turn owned by South African bank Investec.

Despite their shared ownership, Start has no direct links to Investec Ireland. In 2006, around the peak of the property bubble, Start loaned out €600m and its total loan book stood at more than €1bn by the end of 2008.

The lender was behind one in three of the 124 repossession orders handed down by the High Court in the first half of 2012, according to figures from the Courts Service.

Start has 70 staff, with many of them specialising in debt collection.

Irish Independent

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