Spike in numbers going into mortgage arrears for the first time

Thousand of homeowners continue to be in arrears 15 years after the Great Financial Crash. Stock image

Charlie Weston

THERE has been a rise in the numbers of homeowners going into arrears on their mortgages as interest rate rises begin to bite.

It is the first such rise in the numbers getting into early arrears for a decade.

The numbers behind on their payments for three months or more was up by 2,300 in the three months to last December when compared with the previous quarter, the Central Bank said.

Most of additional people going in arrears have mortgages that were sold to vulture funds.

Some 46,743 accounts were in arrears at the end of last year, the Central Bank said. This is up around 1,000, as many of those in early arrears have managed to sort out the situation.

Statisticians at the Central Bank said the rise in the numbers failing to pay their home-loans was due to what it called “early arrears”.

This refers to people who have just began to get behind on their payments.

David Hall of Irish Mortgage Holders’ Organisation, which helps people in arrears, said it was the first spike in early arrears in 10 years.

“This is the first time in 10 years we have seen an increase like this in the numbers going into early arrears.”

He said he has seen a sharp rise in the numbers of homeowners coming to his organisation who are in a situation of what is known as pre-arrears.

This is where they fear they are about to go into arrears.

“We are seeing a lot of people coming to us who are in pre-arrears and in arrears. They are being impacted by the cost-of-living crisis and rising mortgage rates.”

Some 38,000 people whose mortgages are owned by vulture funds are being hit with rises in European Central Bank rates. Some are now on rates as high as 9.25pc.

There have been six ECB rises, and these people are on variable rates. Funds do not offer fixed rates, and these “mortgage prisoners” are unable to switch as they have been in arrears in the past.

Non-bank entities that have bought mortgages from the Irish banks hold a large proportion of mortgages in arrears.

These entities held 77pc of all residential accounts in arrears over one year, the Central Bank said

Some 5,702 residential accounts in arrears are part of a legal process, with just over one third in the legal system for over five years.

Central Bank figures show long-term arrears, which refers to those more than one year behind on their payments, continue to decline.

At the end of December close to 30,000 accounts were in arrears for more than three months.

The number of accounts in arrears greater than one year was 22,626 in December 2022 compared with 26,769 in December in 2021.