Few sections of Irish society have been hit harder by the financial crash than holders of troubled mortgages. Now an easing of their plight, if not a solution, is in sight.
At present, 169,000 domestic mortgage holders are not making full repayments. Of these, nearly 78,000 are three months or more in arrears. In addition, almost one-third of the 150,000 buy-to-let mortgages are in arrears or have had their repayments lowered.
Now Goodbody Stockbrokers forecast that domestic arrears will fall back in 2014 and 2015, and more rapidly in 2016. It will take longer for arrears in the buy-to-let sector to peak. These projections may not appear exciting to people who have already suffered much pain and anxiety, and any benign effect on family incomes will not be felt quickly. But they do give genuine hope.
Irish banks have attracted widespread criticism, much of it justified, from political and official sources as well as the public. They have set aside €6.4bn to cover losses on mortgages, but spent only a fraction of it.
Until recently they were reluctant to admit that they were restructuring mortgages and writing down small quantities of debt. Clearly this reluctance derived from lack of confidence about the short-term future of the economy. But confidence will surely increase, not diminish, as the banks are seen to address one of the most urgent problems.
David Duffy, chief executive of AIB, says the bank will write off some debt for those who cannot repay. It has appointed a new head of arrears, and plans to restructure 2,000 troubled mortgages per month. It has set up a department to assist customers in managing their debt burden. In addition, it will make efforts to ensure that first-time buyers will have mortgage applications processed by the end of the year, before the deadline for abolition of tax relief.
None of these developments compensates for the uncertainty that hangs over the banking system in Europe generally and Ireland in particular. Lars Frisell, chief economist of the Central Bank, summed it up bleakly yesterday when he said that our banks "face great economic uncertainty and pressure to deleverage that stifle their ability or willingness to supply the economy with credit at reasonable cost."
And a survey finds that only 4pc of small and medium enterprises think the Government is doing enough to encourage lending. The banks, like the Government, still have to address another vital question: the health of small business.