Saturday 20 January 2018

Experts call for mortgage interest holiday


STRUGGLING mortgage holders should be allowed to defer their interest payments for up to five years to reduce their monthly repayments.

The measure is one of the main recommendations of a government-appointed expert group on mortgage arrears, which is due to report to the finance minister this week.

Their report does not back debt forgiveness for troubled mortgage holders in negative equity, but instead favours forbearance by lenders towards struggling mortgage holders, in the form of deferred interest payments, mortgage holidays and a moratorium on repossessions.

The recommendation will disappoint the leading Irish economists, who called for debt forgiveness to ensure the country's economic recovery.

The expert group, which includes government officials, bank representatives and economists, is to report to the minister this week.

Their report will also show that up to 45,000 mortgage holders are currently renegotiating monthly payments with their banks or building societies.

They are either paying interest only or requesting "mortgage holidays".

The figures are in addition to the thousands of people in arrears with their mortgages.

Official figures in June said 36,000 people were in arrears for more than three months. The latest Central Bank statistics, to be published within weeks, will show that the numbers have risen dramatically to 40,000.

The government and Irish Banking Federation dismissed claims that 100,000 mortgage holders were in difficulty.

The Financial Regulator, Matthew Elderfield, warned last week that the new figures would show that the situation had gotten worse. Banks and building societies have also reported that mortgage arrears continue to rise.

Bank of Ireland said last week that mortgage arrears "continued to rise" in 2010 but it claimed that numbers were "stabilising".

Irish Nationwide reported particularly high arrears; more than a third of residential mortgage holders were behind with their payments and half of its "buy-to-let" mortgages were in arrears.

KBC reported last week that about 5,000 of its 60,000 home loan customers were in arrears with their mortgages, the majority of whom were behind for more than three months.

Sunday Independent

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