Divorced and jobless less likely to get mortgage fix
Unemployed and recently divorced borrowers are less likely to get a permanent mortgage fix from their bank after falling into arrears, according to research from the Central Bank.
In many cases, only borrowers who can afford to pay more than their original monthly mortgage are getting deals, it found.
The research didn't focus on how people got into mortgage arrears.
When it comes to getting out of arrears, it found that borrowers' current circumstances are more important in determining whether they get a permanent "cure", than factors such as the original size of a loan or income at the time of borrowing.
"Our findings suggest that permanent modifications are typically applied to less distressed borrowers," the report said.
"These borrowers are deemed by banks to be more viable in the long-term, especially given that the most are granted arrears capitalisations which is the more expensive permanent modification," the report said.
The research, by economists Christian Danne and Anne McGuinness , is understood to be the first to use up to date information about borrowers' financial and personal status, rather than looking at characteristics when a loan was first issued. As a result it captures up to date data on marital and job status as well as current income.
The findings suggest that permanent loan modifications that get people out of arrears have mainly been agreed by banks with those in least financial distress, and where family upheaval has been lower.
That appears to bear out criticism that efforts to deal with the arrears crisis have so far focused on easier cases - with a hard core of those in the deepest and longest distress
"Today's Central Bank research paper on mortgage modifications and loan performance gives little hope that the most severe mortgage arrears cases are actually going to be dealt with anytime soon," PIBA, the country's largest group of financial brokers, has said.
The paper looked at cases where a mortgage was permanently modified after falling into arrerars, include term extensions and arrears capitalisations, hybrids, split mortgages and trails.
It found the most common modification granted by lenders was arrears capitalisations - both partial and full.
Capitalising arrears means adding unpaid interest and capital on top of the existing mortgages.
It typically increases a monthly mortgage repayment, unless some combination of term extension or interest rate reduction are also applied.
As such, it can only work for those with the least financial distress - including those who have come back out the other side of a financial set back like poor health or unemployment.
Even in cases where a permanent fix was agreed, 30pc of borrowers were back in arrears a year later, the research shows.