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Friday 22 September 2017

'Truly shocking' as one in four now unable to pay their mortgage

Charlie Weston Personal Finance Editor

THE full extent of the mortgage crisis can be revealed today as new figures show that one in four homeowners is struggling with their repayments.

The startling extent of the arrears timebomb emerged in an analysis of statistics released by the Central Bank.

It shows that arrears are still rising. More than 26,000 households have made no payments on their mortgages for two years.

Fianna Fail has accused the Government of sitting on its hands for years and handing banks too much power to repossess homes.

The stark figures for the first three months of the year show that close to 100,000 households are now three months or more in arrears.

Overall, one in four homeowners is now in a mortgage mess. This is made up of 142,000 mortgage accounts in some form of arrears and another 42,000 which are paying less than the full monthly amount. There is a total of 774,000 mortgages in the State.

One of the few positives in the figures is that there has been a slight drop in the number of mortgage-holders going into arrears for the first time.

However, figures for the first three months of the year paint a bleak picture:

* Close to 100,000 households are now three months in arrears. This is up from 92,000 at the end of last year.

* There has been a rise of 3,500 in the numbers of householders that are more than six months behind on their payments.

* A total of 54,000 mortgage-holders are now more than a year in arrears.

* Another 42,000 homeowners are not in arrears but can only make partial payments every months.

* Just 144 split mortgages – which are promoted by regulators as a solution for distressed mortgages – were put in place in the three months to March.

There has also been a sharp rise in the number of buy-to-let mortgages that are in trouble. More than a third of investors are failing to meet their full monthly payments.

This is made up of 29,000 accounts that are three months or more in arrears, another 10,000 that are less than three months in arrears and 13,000 investor accounts where reduced payments are being made.

Fianna Fail Senator Thomas Byrne described the latest mortgage arrears statistics as "truly shocking". He said it was worrying that 26,000 of these were in arrears of more than two years.

Mr Byrne commented: "These families are now extremely vulnerable to losing their homes due to the failure of Government to hold the banks to account and introduce arrangements that are fair and sustainable."

He claimed that the banks' unwillingness to play ball was evident in the fact that only 144 split mortgage arrangements had been put in place.

"This represents a tiny 0.2pc of all restructured mortgages. In some cases, these customers are being charged full interest on the parked element of their mortgage, so the arrangement is rendered all but useless."

But Minister of State at the Department of Finance Brian Hayes said mortgage arrears was the number-one issue for the Government. He said: "This is a major problem and it has got to be confronted. We, in the Government, expect results from the Central Bank management and banks themselves."

The Irish Banking Federation pointed to the slowdown in the growth of early mortgage arrears as evidence that the worst should now be over. It said that 31,000 new restructured arrangements were put in place during the first quarter of this year.

However, legal-rights group FLAC (Free Legal Advice Centres) said borrowers in trouble lacked sufficient structures to support them in dealing with their serious debts.

Noeline Black, of FLAC, said: "The Government, despite promises to the contrary, seems to have ceded to pressure from the banking sector in setting the power balance between lenders and borrowers."

Banks expect a fall in the level of arrears after regulators changed the rules in a move that means debt-ravaged homeowners will no longer have one year's protection from having their homes repossessed.

However, the reduction from a year to two months' protection will lead to a surge in the numbers of homes being taken over by banks, experts said.

Irish Independent

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