Homeowners get loan help
Thousands of stretched borrowers renegotiate mortgage deals
THOUSANDS of hard-up homeowners have succeeded in getting their lenders to allow them to restructure their mortgages in a bid to make their repayments more manageable.
In excess of 30,000 homeowners have renegotiated their mortgage deals with their lenders, the Irish Independent has learned.
The Irish Banking Federation (IBF) said cash-strapped homeowners have been forced to come to a new agreement with their lenders after they lost jobs or suffered pay cuts.
However, some mortgage experts reckon the numbers who have restructured their mortgages is far higher.
Mortgage adviser Karl Deeter, of Irish Mortgage Brokers, pointed out that more than 26,000 people were at least three months in arrears, according to Financial Regulator figures.
"To say that just 30,000 people have restructured their mortgages does not seem right. If 26,000 people are in arrears, it seems a bit unusual that just another 4,000 have restructured their mortgages," he added.
Homeowners on standard variable rate mortgages are facing the prospect of higher rates after Permanent TSB raised its interest rate on their mortgages by 0.5pc at the start of this week.
Other lenders are expected to follow suit, in a move that could affect up to 350,000 people.
Banks and building societies are free to hike standard variable rates whenever they want, but can only move trackers when the European Central Bank raises rates.
IBF chief executive Pat Farrell insisted on RTE's 'Morning Ireland' that banks were working with borrowers in difficulty to keep them in their homes.
He said thousands of mortgages have already been restructured, adding that this included payments holidays. This is where the homeowner does not pay anything for a certain amount of time.
Another option being allowed by banks is the rolling-up of interest. This is where there is no interest initially, but it is added to the loan amount.
He said another option being offered to borrowers was to extend the term of the loan.
Mr Farrell added that banks were losing money on mortgages because of funding costs, but lenders who are members of the IBF would not seek to repossess a home where the borrower engages with the bank or building society.
There are 8,000 cases where a formal demand for the property or legal proceedings have been issued, according to the Financial Regulator. And more than 6,400 people have failed to pay their mortgage for a year or more, a recent report from Moody's rating agency shows.
Communications Minister Eamon Ryan is pushing plans at Cabinet level to assist mortgage holders with arrears.