Sunday 17 December 2017

Mortgage arrears as high as 45pc at subprime lender Start

Emmet Oliver Deputy Business Editor

MORTGAGE arrears at subprime lender Start Mortgages are now as high as 45pc in some cases as the residential housing market continues to slide.

Despite the soaring level of arrears, the level of repossessions is low when measured against the level of arrears, new figures show. The lender is working with borrowers to extend loans and reduce monthly repayments, said Standard & Poor's, which has done its first analysis of Start's figures in over a year. The figures are for loans which Start packaged up (known as 'securitisation') and sold off to investors.

Arrears for borrowers 90 or 180 days behind on their mortgages can be as high as 45pc in some of the groups of loans, Standard & Poor's noted. Start packaged the loans up into vehicles known as 'Lansdowne 1' and 'Lansdowne 2'. Arrears in the different loan groups range from 33pc to 45pc.

"This is a sharp increase from the levels reported in the January 2009 investor report," said the agency.

"We understand that loan modifications are taking place in the pools underlying both transactions. We further understand that some borrowers who may have otherwise gone into arrears are extending the term of their mortgage," said the agency. Such arrangements probably mean that arrears are understated, it said.

"We understand that in Ireland the lender is required to show forbearance to borrowers, which we believe could limit the number of repossessions," it added.

Irish house prices have continued to decline and are currently 35pc lower than their peak at the end of 2006, it said.

The Government is implementing a range of policies to deal with mortgage arrears, but so far has balked at the idea of any debt write-offs or debt forgiveness, citing the cost and the fragility of bank balance sheets.

Irish Independent

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