Over one in five mortgage holders in difficulty

Fri, Aug 24, 2012, 01:00

JUST OVER one in five home loans was in some form of financial difficulty at the end of June, according to new figures on mortgage arrears from the Central Bank.

The figures include for the first time mortgages where borrowers have missed repayments for fewer than 90 days in addition to regularly reported figures on mortgage arrears of 90 days or more.

There were 168,637 owner-occupier mortgages, or just over 22 per cent of the 761,533 home loans in the State, either in arrears or which had been modified to help borrowers make some form of repayment at the end of June.

This was up from 162,572 or 21.3 per cent three months earlier.

In terms of the value of the debt, €30.5 billion or 27.2 per cent of the €112 billion outstanding in owner-occupier mortgages at banks in Ireland was in arrears or had been restructured, compared with €29.5 billion or 26 per cent in March.

The number of borrowers falling into arrears slowed in the second quarter, with arrears of 90 days or less falling to 45,165 mortgages at the end of June, down from 46,284 mortgages in March.

The Irish Banking Federation said the high rate of arrears reflected “the difficult economic circumstances in which an increasing number of customers find themselves” but noted that there had been a slowdown in the rate at which new customers were falling into arrears over a number of successive quarters.

“This easing in the pace at which new arrears cases are arising is welcome and we will look to future quarters for confirmation of the sustainability of this trend over time,” said the group.

Stockbroking firm Davy said the figures showed that the rate at which early-stage arrears converted into longer-stage arrears fell for the first time.

The percentage of mortgages in arrears of 90 days or more increased to 10.9 per cent, or 83,251 mortgages at June, compared with 10.2 per cent or 77,630 mortgages at the end of March.

Mortgages in arrears of 90 days or more or which had been restructured rose to 16.2 per cent, or 123,472 mortgages, at the end of June from 116,288 mortgages or 15.2 per cent three months earlier.

By value, the amount of mortgage debt in arrears of 90 days or more totalled €16.5 billion or 14.7 per cent of total owner-occupier mortgage debt, compared with €15.4 billion or 13.7 per cent of mortgages three months earlier.

Fianna Fáil finance spokesman Michael McGrath accused the Government and banks of failing to tackle the crisis in a meaningful way, saying they seemed “paralysed” by the scale of the problem.

The figures were “dismal”, a “personal crisis” for thousands of families and an economic crisis for the State, said Mr McGrath.

The Central Bank said it was continuing to monitor the progress of lenders on the roll-out of “new forbearance and loan modification techniques to provide longer-term and more sustainable solutions for customers in financial difficulty” before the year end.

Further details on these measures would be published early next year, the Central Bank said.

The number of properties in possession remained unchanged at 961 in June over the three-month period. The Central Bank said legal proceedings were issued to enforce on debt or security on a mortgage in 345 cases during the second quarter of the year.

Court proceedings concluded in 193 cases during the period and in 97 of these cases the courts granted orders for possession or sale of the property. During the three months, lenders took possession of 146 properties, 44 of which were repossessed on foot of a court order, while the remaining 102 properties were voluntarily surrendered or abandoned. There were 142 properties disposed of, leaving lenders in possession of 961 properties at the end of June.