Sunday 21 January 2018

Homeowners in mortgage arrears up by nearly a third

The number of homeowners in arrears has shot up by 28pc in the first half of this year. Photo: Getty Images
The number of homeowners in arrears has shot up by 28pc in the first half of this year. Photo: Getty Images

Charlie Weston and Laura Noonan

AROUND 9,000 of Permanent TSB's mortgage customers have not paid their home loan for three months or longer.

The number of homeowners in arrears has shot up by 28pc in the first half of this year.

The Financial Regulator is due to issue arrears figures for all lenders today. These are expected to show a surge in those behind on repayments.

Permanent TSB chief executive Kevin Murphy said the bank had 180,000 mortgage customers, with around 9,000 in arrears, mainly due to higher unemployment.

This works out at 5.2pc of mortgage customers being in arrears, far higher than the proportion of mortgages in arrears across all lenders in this market.

Mr Murphy said the bank was working with its customers to manage the situation, but he admitted that the problem will get worse by the end of the year.

Permanent TSB has increased its standard variable rate three times since last summer, hitting customers with rises of 1.5pc in total.

A third of the lender's mortgage customers have standard variable rates, which banks are free to increase whenever it suits them.

But Mr Murphy insisted that most of the bank's variable rate customers had low levels of monthly repayments as they were older and had largely paid down their mortgages.

Permanent TSB's variable rate rise has gone from 2pc last summer to 4.19pc now, adding more than €100 to the monthly repayments for every €100,000 borrowed.


The bank was the first lender to raise standard variable interest rates last summer. It increased them by a further 0.5pc in February, and another 0.5pc last month.

Meanwhile, it emerged yesterday that households are paying down around €820m a month more than they are borrowing in mortgage and other debts.

The Central Bank produced figures showing that lending to households and businesses continued to fall in July. The bank said lending to households was down almost 5pc compared with a year earlier.

Some €138m less was lent for home purchases in July than in June, while total lending to households fell by €716m in July.

Economist with Bloxham Stockbrokers Alan McQuaid commented: "There is very little good news in these latest banking figures, with the annual rates of decrease for the main loans to the household sector continuing to rise in July, and no sign that the trend will change any time soon.

"Until the banking sector crisis is fully resolved and things improve on the labour market front then the supply/demand for credit will remain subdued."

Bank of Scotland (Ireland) has written to mortgage holders who have an interest-only deal asking how they intend to repay the capital sum. A large number of its customers have interest-only arrangements, which means they will have to repay the capital at the end of the mortgage term.

Permanent shares soar: see business

Irish Independent

Promoted Links

Promoted Links

Business Newsletter

Read the leading stories from the world of Business.

Also in Business