MORTGAGE arrears are the cancer gnawing away at the Irish economy preventing any recovery.
WHILE there have been some encouraging signs recently; a stabilisation of property prices, a slight recovery in private sector employment, higher consumer confidence levels and the recent deal on the promissory notes, these are all overshadowed by the still-worsening mortgage arrears crisis, writes Dan White.
According to the most recent Central Bank statistics, there were 135,000 owner-occupied mortgages in arrears, almost 18pc of the total, at the end of September with a further 44,000 having been restructured but no longer in arrears.
In other words, close on a quarter of all owner-occupied mortgages are either in arrears and/or have been restructured.
Things are proportionately even worse with buy-to-let mortgages with 37,000 such loans, almost a quarter of the total, in arrears and a further 14,000, almost 10pc, having been restructured but no longer in arrears.
That translates into over a third of buy-to-let mortgages being either in arrears and/or having been restructured.
Add it all up and €45bn of all mortgages, both owner-occupied and buy-to-let, were either in arrears and/or had been restructured by the end of September 2012.
That's getting on for a third of the total outstanding €142bn stock of mortgages. It's car crash stuff. So, almost five years after the economic crisis first broke, what have the banks been doing about mortgage arrears? Sweet Fanny Adams would appear to be the answer.
Central Bank governor Patrick Honohan recently admitted that the tardiness of the banks in dealing with mortgage arrears was causing him to "tear his hair out".
If the boss of the Central Bank is so annoyed by the banks' failure to address mortgage arrears then what about those unfortunate homeowners, almost 180,000 of them, who are stuck in limbo by their seeming inability to pull the finger out?
On the face of it, AIB boss David Duffy's promise yesterday that his bank will write to all 33,000 of its mortgage customers who are in arrears by the summer and hopes to have deals worked out by the end of the year looks like progress.
Look again. Does "by the summer" mean May, August, some time in between or will it prove to be yet another deadline that comes and goes with nothing much happening?
Ditto David Duffy's promise to have worked out deals with all of its mortgage arrears customers by the end of the year.
Will these turn out to be genuine restructurings, including debt write-downs, or more of the "extend and pretend" sticking plaster "solutions" to which all of the banks have resorted over the past five years as they desperately seek to avoid facing up to the awful state of their mortgage books?
About the best that can be said is that David Duffy is the first of the bank bosses to set his institution specific targets for dealing with mortgage arrears. For the time being I am prepared to put my scepticism aside and give AIB the benefit of the doubt.
However, AIB is only one, admittedly very big, bank. What about all of the other lenders, both domestic and foreign-owned?
Even if AIB pleasantly surprises us all and succeeds in cleaning up its mortgage book by the end of the year, that still leaves all of the other banks' mortgage arrears?
Any solution to the mortgage arrears problem is going to involve a sharp increase in repossessions, particularly of buy-to-let properties.
Even with the best will in the world there is a hard core of mortgages that are beyond restructuring. The banks, not surprisingly, are desperate to avoid going down this path.
Patrick Honohan could have lost a lot more of his hair by the time this mess is finally sorted out.