LENDERS here are changing more mortgages to reduce repayments than any of their European counterparts.
Almost 70,000 homeowners have won agreements from their banks to lower their monthly repayments by opting to pay interest only or by being granted a payment holiday.
But investors who have put money into the banks may be better off if Irish lenders repossessed more homes. Close to one in 10 mortgages, or 9pc, have been modified to allow homeowners to reduce their monthly repayments, according to credit rating agency Fitch. This compares with just 3.2pc in Spain, which has also had a property price collapse.
Mortgage modifications are virtually non-existent in the Netherlands, while the numbers opting to change the terms of the home loan in Britain are low, a Fitch report seen by the Irish Independent shows.
Adjusting the monthly repayment amount avoids repossession and benefits borrowers, Fitch said.
"In the longer term, loan modification programmes should prove valuable to some if they are successful in rehabilitating borrowers and preventing defaults rather than merely postponing the default," the report states.
But lenders in this country may need to repossess more homes if bondholders, who have invested in pools of Irish mortgage bonds, were not to lose out. That's because bondholders would get some money now rather than later.
The report added that half of those homeowners who have had their mortgage restructured were meeting the new lower repayments -- but many expect to have problems meeting repayments in future.
Close to 56,000 mortgages are in arrears of three months or more, with most experts expecting the numbers to rise throughout this year. Some 70,000 mortgages have been modified but 30,000 of these have arrears owed on them.
"Fitch's central base expectations are for a further fall in house prices which, along with the difficult economic environment, is likely to lead to a continuing rise in mortgage arrears," the agency said.
Altering the repayments on mortgages has the potential to benefit homeowners and lenders alike, but only if the process is well managed.
But modifying mortgages may not be enough to avoid large numbers of homeowners avoiding repossession.
Figures out last week from the Central Bank show that 40,000 homeowners are six months or more behind on their repayments. These owners are seen as at high risk of losing their homes. However, a partial debt-relief programme to help heavily indebted households would lead to large losses for bondholders who finance mortgage costs.