Richard Curran: New deals from banks are not happening quickly enough
The numbers of people in trouble with their mortgage for longer periods of time is growing.
Yet the numbers of new people getting into trouble is falling. This a key pattern to emerge in the latest Central Bank mortgage arrears figures for the third quarter of this year.
In total there were 141,520 principal private dwelling mortgages in arrears in the third quarter. This was down from 142,892. It is a very small fall but perhaps it represents a bottoming out in the scale of the arrears problem.
However, it does not represent any great progress in fixing it. The figures show that home mortgage arrears of over 90-days amounted to 99,189, an increase of 1,315 on the previous quarter. This increase was driven entirely by an increase in arrears of over 720 days.
People who are in trouble for quite a while are still in trouble. New deals from banks are not happening quickly enough to reduce the numbers in long term arrears.
Surely, the people most likely to secure a sustainable solution from the bank are those who have been in arrears for a long time. The bank would hardly do a deal with someone when they are just three months behind on their mortgage repayment.
They are more likely to reach a deal with someone who has been behind for over a year. Yet longer term arrears are growing – albeit by a small amount.
In the buy-to-let segment, the pattern is the same. There are overall decreases in arrears but an increase in the numbers behind for six months or more.
Banks have complained that some people will simply just not engage with their lender. This has driven them to issue legal letters rather than sustainable solutions, because banks argue, they just cannot get a reply of any kind from some borrowers in arrears.
It would be very worrying to think that greater numbers of people are responding in this way, which was driving up the numbers in longer term arrears.
It is more likely, that banks are not managing to do sustainable write-down deals quickly enough. That is something they will have to ramp up and improve.
These figures are not all good news because it is clear the deals are not coming as fast as they should. However, the figures do contain a basic positive fact, which is a bottoming out in the numbers of new people falling into arrears.
This may be linked in no small part to the improvements in employment which we have seen the creation of 58,000 new jobs in the 12 months to September.
The mortgage crisis is still one of the biggest obstacles to economic growth and it has not yet been solved. But it looks like it may have finally stopped getting worse.