Home loan arrears soar -- but write-offs ruled out

CRIPPLING: More than one in 10 mortgages are now not being repaid

Claire Murphy

MORE than one in every 10 Irish home loans are not being repaid -- but the Department of Finance has shot down the suggestion of widespread debt forgiveness.

The Cabinet was meeting today to discuss the options available as the numbers of residential mortgages in arrears or those restructured rose by 10pc in the second quarter.

Some 55,763 mortgages are now more than 90 days in arrears, with many thousand more loans restructured.

Ciaran Phelan, CEO of the Irish Brokers' Association, said: "The number of mortgage restructures has doubled in the latest quarter data, up from 3,500 to 7,000, which means the banks are starting to understand that this is the only real solution.

"This number needs to rise significantly if we're to slow the growing level of arrears -- there were 6,000 new households in arrears in the quarter."

There were 7,236 cases where a formal demand had been issued in relation to mortgage arrears -- these cases amounted to some €143.2m in arrears build up on loans of more than €1.5bn.


Over the three-month period, a total of 173 properties were taken into possession by lenders -- 54 of these under Court Orders.

Dermot O'Leary, chief economist at Goodbody Stockbrokers, said that we are witnessing a "worsening pace".

"Over the past two quarters the rate of deterioration has worsened, which is a slightly worrying sign," he said.

"It's still within the realms of the stress tests carried out earlier on in the year, but the trend from quarter to quarter is something to watch very, very closely."

But the Department of Finance said that there is no "magic bullet" or "one-size-fits-all" solution to the problem.

And the spokesman said, "suggestions that are circulating such as blanket debt forgiveness are not realistic options".

An inter-departmental group is meeting today and will report their findings to the Government, but Minister of State for Finance Brian Hayes said that all options are on the table.

The group that represents people facing repossession, New Beginning, said that it was unfair that borrowers were being made to suffer for unsustainable loans.

Representative David Hall said that the Central Bank figures show a clear and repeated pattern which will lead to many thousands of home owners likely to lose their family home unless there are immediate solutions brought forward.


"The nightmare discussion is how many mortgages are unsustainable and that no restructuring in the world will allow adequate servicing of the loan," he said.

"What happens to these people? Where do they go?"