Tuesday 20 March 2018

Lenders 'are masking the true extent of arrears'

Charlie Weston Personal Finance Editor

MORTGAGE lenders have been accused of masking the true extent of the arrears crisis.

Some 32,300 people are in arrears for three months or more, but this largely excludes another 15,500 people who are getting mortgage support from the State.

The official number of those in arrears also excludes thousands more homeowners who have had their mortgage restructured by getting an agreement to pay interest only or have extended the term of the home loan.

The banks won't say how many people they have helped out in this way, but commentators have pointed out that these mortgages are regarded as performing and therefore do not get categorised as in arrears.

Many more householders, particularly where people have lost their jobs, are working though their savings to meet repayments.

Financial adviser Liam O'Brien of One2One debt consultants accused banks of deliberately masking the problem.

He said he has advised a number of financially stretched consumers who have been encouraged by their banks to pay as little as 10pc of their monthly repayments when they can pay 50pc or more.

He said lenders were too eager to allow cash-strapped consumers radically reduce their mortgage payments as lenders seek to keep repayments coming in on unsecured debt like credit cards.

The thinking here by the banks is that the mortgage problem can be dealt with later, he said.

Mr O'Brien stressed that homeowners should prioritise repaying their mortgages over other debts because people could lose their homes.

A number of financial advisers said that where the homeowner was getting the state-provided mortgage interest supplement payment, the mortgage is classified as performing.


A spokesman for the Irish Banking Federation confirmed that where a homeowner is receiving mortgage interest supplement, but is not in arrears, then that mortgage would not be included in the arrears figures produced quarterly by the Financial Regulator.

IBF chief executive Pat Farrell said last week mainstream lenders "remain committed to doing everything possible to help people with genuine repayment problems".

Housing charity Respond claimed the true figure of borrowers in trouble was twice that reported.

Spokeswoman Aoife Walsh said in reality 70,000 homeowners could be in danger of default.

Irish Independent

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