Friday 13 December 2019

€1.8bn hole as half of subprime mortgages in arrears

Fianna Fail TD Michael McGrath
Fianna Fail TD Michael McGrath
Charlie Weston

Charlie Weston

MORE than half of the mortgages taken out with subprime lenders are in arrears.

But these lenders do not have to meet targets set by the Central Bank to restructure problem homeloans.

There are almost 18,000 subprime mortgages on homes, and close to 750 buy-to-let loans, information gathered from Dail questions by Fianna Fail's Michael McGrath indicate.

But 57pc of the subprime mortgages taken out to buy family homes are behind on their repayments, he said.

Subprime lenders include Start and Permanent TSB's Springboard.

These lenders gave loans to people with poor credit histories during the boom, charging higher interest rates than mainstream banks.

Often other debts, such as credit card balances, were consolidated into the subprime mortgage.

Mr McGrath said the mortgage books of subprime lenders were in an "appalling state".

"The Minister for Finance Michael Noonan has confirmed that 57pc of the family home subprime mortgage book is in arrears of 90 days or more.

"Of a total subprime mortgage book of €3.316bn, accounts amounting to a staggering €1.88bn are in arrears of over 90 days. "Despite this, the minister confirmed the Mortgage Arrears Targets Programme (MARP) has still not been extended to subprime mortgages."

Banks, including AIB and Bank of Ireland, have to meet strict targets on the number of troubled mortgages they restructure by certain dates. But subprime lenders are not subject to the targets.

Mr McGrath said it was inexplicable that the Government continued to exempt the subprime mortgage sector from the mortgage arrears targets.

"Subprime mortgages are among those most in need of permanent restructuring and the minister should move immediately to apply rigorous restructuring targets on subprime lenders," he said.

The Fianna Fail finance spokesman called for the minister to put the spotlight on the interest rates being charged, which, he said, were often exorbitant in the case of subprime mortgages.

Irish Independent

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