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Friday 15 December 2017

State pays mortgage bill on 17,500 homes

Households in crisis receiving average of €280 a month


More than 17,500 families in danger of losing their homes are having their mortgage interest paid by the State, disturbing new figures obtained by the Sunday Independent have revealed.

The bill for the Mortgage Interest Supplement scheme will reach €64m this year, with householders in crisis receiving an average of €280 a month so they can hold on to their homes.

However, some householders who took out loans with sub-prime lenders at sky-high interest rates are receiving up to €1,000 a month, the Sunday Independent has learned.

The figures follow confirmation that soaring mortgage repayments rates have driven the cost of living up for the first time in nearly two years.

Mortgage interest repayments jumped by 10 per cent last month and are up 24 per cent in the last 12 months due to rate hikes by mortgage providers, figures from the Central Statistics Office show.

Tracker mortgages are immune from these increases because they are linked to static European base rates.

But that means that variable-rate customers are bearing the brunt as financial institutions battle to repair their balance sheets.

There are 237,000 people on variable-rate and all major lenders, including AIB, Bank of Ireland, EBS and Irish Nationwide have pushed interest rates up in the last few months.

Permanent TSB have put their rates up the most, with three hikes in 12 months pushing up repayments by €200 a month on a €300,000 mortgage. It means more people are turning to welfare to help to pay their mortgage interest rates.

The purpose of the Government's Mortgage Interest Supplement scheme is to provide short-term income support to people who are unable to meet their mortgage interest repayments for their sole place of residence.

The scheme is administered by the Community Welfare Division of the Health Service Executive (HSE) on behalf of the Department of Social Protection, and applicants and community welfare officers decide if the amount of interest payable is reasonable.

"This 'reasonableness test' depends on the location of the residence; the size and age of the mortgage; the size of the residence in relation to the family circumstances of the individual; the socio-economic status of the individual; and the likelihood that the person will find employment in the short to medium term. Where an application is considered reasonable, mortgage interest supplement will be granted," a spokeswoman for the Department of Social Protection told the Sunday Independent.

The spokeswoman added that not all applications were successful, but where payments were made it was for a maximum of 12 months.

"The Community Welfare Officer after reviewing the circumstances may decide not to award mortgage interest supplement.

"This can be for many reasons; for example, the size of property may be too large for the family circumstances of the individual, the amount of arrears outstanding on the mortgage may be too great or the person may not have any prospects of meeting the mortgage payments."

The Mortgage Interest Supplement scheme is under review as part of the Mortgage Arrears and Personal Indebtedness Review Group.

It comes as more and more families across the country are struggling to meet their monthly mortgage payments.

Every 0.5 per cent increase in interest rates means that householders have to find an extra €88 a month on a €300,000 mortgage.

Out of almost 790,000 mortgage holders in Ireland, 36,438 were more than 90 days in arrears at the end of June.

Figures from the Central Bank and Financial Regulator show that out of the 36,438 borrowers in trouble, 24,797 were more than 180 days in arrears.

Sunday Independent

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