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100,000 people struggling to pay mortgage

THE mortgage crisis has hit a new high with 100,000 homeowners now struggling to meet their repayments.

Figures released by the Central Bank today show that the number of borrowers who are now in arrears of more than three months is 62,000.

And another almost 40,000 have already restructured their mortgage repayments.

The fact that the crisis has now reached 100,000 homes for the first time is worrying news for the Government ahead of next month's Budget.

Finance Minister Michael Noonan will be under severe pressure to clarify what, if any, long-term help might be put in place for mortgage holders.

Banks are blaming rumours of a debt forgiveness scheme for the fact that many people have stopped meeting their repayments.

They say there has been a spike in arrears because some people thought there would be a scheme put in place to help people in debt.

However, rising unemployment and people exhausting their savings are understood to the biggest problem for those in mortgage distress.

Today's figures for July, August and September are also set to show a lower number of restructured mortgages than the last time figures were issued, after a leading lender admitted to the Central Bank it has been double counting.

This means that the number of modified mortgages, where the borrower is not in arrears, is set to be little changed from the June figure of under 40,000.

Most people who get a deal to restructure their mortgages go on interest-only in order to lower the monthly repayments.

Operations manager with Irish Mortgage Brokers Karl Deeter said borrowers needed more State help.

"We have now breached the critical 100,000 mark in terms of troubled mortgages. The time for talking about this problem is over," he said.

Bank of Ireland, KBC Bank and Permanent TSB in the past week blamed higher arrears levels on expectations of mortgage debt write-off deals.

Now that the Government has produced its working paper on mortgage solutions, the Keane Report, there is likely to be less speculation about debt forgiveness, experts said.

The likelihood that there will be another three cuts in European Central Bank rates should benefit most mortgage holders.

Most lenders passed this month's ECB cut to variable rate mortgage holders, although Ulster Bank, Bank of Ireland and Start Mortgages are holding out.

Lower ECB rates should mean fewer people going into arrears, although the expectation is that arrears will continue to rise for a while yet.