Borrowers must learn to help themselves
The revelation that almost one in five of all consumer loans are now in arrears confirms fears that the problem of loan arrears is much worse than the Central Bank suggests. As unemployment rises and wage cuts and tax increases slash the incomes of those lucky enough to keep their jobs, a tsunami of personal debt arrears is about to strike the Irish banking system.
The Central Bank arrears statistics, which only cover mortgage arrears, have always been deeply flawed. Borrowers who have notified their banks that they are experiencing problems meeting their repayments are effectively excluded from the numbers, meaning that while the Central Bank reported just under 56,000 homeowners were in arrears on their mortgages, figures from the Irish Credit Bureau, which monitors loan arrears on behalf of all the Irish banks, indicate that over 90,000 of mortgages are behind.
That is an awful lot of homeowners, with one in eight who have mortgages now at least one month in arrears.