Thursday 5 December 2019

Default fears grow as one-in-10 mortgage payments in arrears

Peter Flanagan

THE prospect of a wave of mortgage defaults has increased with the news that one-in-10 home loans is in arrears.

Data from the Central Bank due this week is expected to show as much as 10.5pc of private residential mortgages -- about 80,000 loans -- are now behind their payments by at least 90 days.

While the bank's report on mortgage arrears covering the first three months of this year is not yet complete, it is expected to continue the trend of arrears rising more than 1pc every quarter, which has been the case since early last year.

At the end of 2011, 9.2pc of mortgages were more than three months behind.

Including restructured mortgages that are not officially in arrears, the rate of home loans in distress of some sort could be as high as 15pc.

The figures tally broadly with data from the banks. The latest round of financial results from the sector showed the rate of loans in difficulty has risen steadily in the past year.


The results will put pressure on the Government to put in place a formal structure for people who are unable to keep up their repayments.

The main banks have until the end of this month to present long-term plans for dealing with mortgage holders in difficulty to government.

After that the strategies will be tested before a final decision is made on what plans will be pursued by the state.

Yesterday, a spokesman for the Irish Banking Federation -- the industry's main trade group -- said the sector needed long-term solutions.

Some solutions could include formal provisions for the splitting of mortgages as well as the banks taking over a property and renting it back to the occupant.

Solutions like those are known to have been implemented on an ad-hoc basis by various lenders, but they are believed to be unwilling to formalise these arrangements for fear of "strategic defaults" by borrowers.

Irish Independent

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