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70,000 struggle to repay home loans, new figures reveal

45,000 borrowers have come to arrangements with their banks

MORE than 70,000 people are struggling to repay their mortgages, an Irish Independent investigation has revealed.

The number is the equivalent to the population of Galway city.

Although a frighteningly large number, 70,000 is considerably less than the 100,000 claimed to be in trouble with their home loans in an alarmist commentary by UCD professor Morgan Kelly published earlier this week.

Official data on the numbers in arrears will be released by the Central Bank next month, with the figures widely expected to show that 40,000 homeowners have not paid their mortgages for three months or more.

This represents 5pc of residential mortgages and is a rise of 4,000 on the numbers in arrears in June this year.

Ratings agency Moody's last night said 5.14pc of Irish mortgages that have been packaged up and sold on to investors are three months or more in arrears. In addition, another 30,000 homeowners who are not in arrears have struck deals with their lenders to lower their monthly repayments.

Overall, 45,000 borrowers have come to arrangements with their banks or buildings societies to either pay interest only or avail of a payment holiday -- but some of these are included in the official arrears figures. This means the total struggling with their mortgages is around 70,000 -- or one in 11 homeowners.

Prof Kelly this week claimed one in eight mortgages were in trouble. This has been widely disputed by banking experts.


"The figure for those who are struggling to repay their mortgage is 70,000 tops. Where Morgan Kelly got his figures, I don't know," a spokesman for the Irish Banking Federation said, insisting that there had been no attempt to massage the figures.

A spokeswoman for Bank of Ireland said that the arrears level for its customers with residential mortgages has risen but there were now signs of arrears stabilising. Half of its customers who were in arrears had since worked out a deal to make partial repayments.

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The spokeswoman added: "There has also been a decline in the number of customers who may be experiencing difficulty making contact with us."

KBC Bank, meanwhile, insisted its arrears level was also stabilising -- with 3,000 customers three months or more behind on their repayments.

Central Bank governor Professor Patrick Honohan said there was no evidence of a dramatic deterioration in the mortgage arrears situation.

There continues to be a small number of orders for possession granted by the courts, with judges more often adjourning cases to allow negotiations between lender and borrower.

However, the figures from Moody's indicate 10,900 homeowners have not made mortgage repayments for a year or more. People who default for a year or more are at serious risk of losing their homes.

The Irish Independent has also learned that the government-appointed expert group on mortgage arrears has now settled on a scheme to allow struggling homeowners to defer some of the interest on their home loan.

It had initially been thought the group would recommend allowing struggling homeowners to defer some of the capital amount for five years. But last night it emerged banks have not signed up for this plan. Instead, those finding it hard to pay their mortgage will be able to defer some of the interest payments for up to five years.

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