Sunday 19 January 2020

Three more years of pain ahead for mortgage holders in arrears

Some 169,000 mortgage account holders are not making full repayments. Photo: Thinkstock
Some 169,000 mortgage account holders are not making full repayments. Photo: Thinkstock

Charlie Weston Personal Finance Editor

THE mortgage arrears problem for homeowners will peak in 2013 but it could be another three years before the numbers in trouble with their home loans begin to drop sharply.

And arrears in the buy-to-let market will continue to worsen for a while yet, according to a report for Goodbody Stockbrokers.

Some 169,000 mortgage account holders are not making full repayments. Of these, some 77,630 are three months or more behind on the repayments. Overall, one in five residential mortgages are in trouble.

Goodbody analysts Dermot O'Leary and Eamonn Hughes estimate that residential mortgage arrears will stop rising in the first half of next year.

The number of home mortgages that are in arrears will then fall back in 2014 and 2015, but the number of problem mortgages will not start to fall rapidly until 2016.

Almost one-third of the 150,000 buy-to-let mortgages are either in arrears or have had to have their repayments lowered. It was set to take longer for this problem to peak, Goodbody said.

"While we believe that arrears on the owner-occupier book will peak in the first half of 2013, in our view the peak in the buy-to-let sector will come later," the stockbroking firm said in a report.

The report points out that the domestic banks have put €6.4bn aside to cover losses on mortgages, but had only written off €251m of mortgage debt by 2010.

It came as it emerged that AIB has appointed a new head of arrears from the UK, and plans to restructure 2,000 troubled mortgages a month.


Garry Stran, who spent 20 years with British lender Nationwide and is regarded as an expert on debt restructuring, will now head up a new arrears support unit at EBS and AIB.

A spokeswoman for AIB said: "Previously there were separate heads of these two units but Mr Stran will now head up both of them."

Experts predict that banks are now going to take a more aggressive approach to dealing with problem mortgages.

AIB has put 2,000 staff into a new section it calls a 'financial solutions group' that will offer those unable to meet repayments options like adding arrears on to the existing mortgage debt, splitting the mortgage and mortgage-to-rent schemes.

Bank chief executive David Duffy said the lender would also write off some mortgage debt for those who genuinely can't repay all they borrowed.

Meanwhile, AIB has told brokers it will prioritise new mortgage applications for those trying to meet the year-end deadline to qualify for mortgage tax relief.

AIB insisted yesterday it would pull out all the stops to ensure first-time buyers met the deadline.

It added that it was set to exceed a target of €1bn in mortgage sanctions this year.

Irish Independent

Also in Business