Banks given June deadline over mortgage arrears problem

The Central

Bank of Ireland

has told lenders

that it expects them to have provided “sustainable solutions” to 75 per cent of their mortgage arrears customers by the end of June and “concluded solutions” to 35 per cent of them by that date.

These targets form part of the regulator’s attempt to address the significant mortgage arrears problem that exists with Irish banks.

The targets apply to AIB (including EBS), Bank of Ireland (including ICS), Permanent TSB, KBC Bank Ireland, Ulster Bank and ACC, which is withdrawing from the retail market here, and apply to customers who are 90 days or more in arrears.

The regulator announced its first set of targets in March his year and has been ratcheting them up since then.

Potential problemsFigures published last week showed that lenders have succeeded in meeting the Central Bank's most recent targets for dealing with mortgage arrears, but potential problems have emerged in the nature of some of the solutions proposed, according to an audit.

The Central Bank review identified "issues" in checking facts such as a borrower's income or the value of a property, and in following up so-called "legal" cases. The number of mortgage accounts for principal dwelling houses (PDH) in arrears, fell from 142,892 (18.5 per cent of total stock) to 141,520 (18.4 per cent) in the three months to the end of September.

PDH accounts in arrears of more than 90 days at the end of September amounted to 99,189, an increase of 1,315 on the previous quarter. This increase was driven entirely by accounts in arrears over 720 days, with all other maturity categories declining.

The number of these accounts in early arrears of less than 90 days declined by 6 per cent during the quarter. There was a total stock of 80,555 PDH accounts classified as restructured at the end of September, reflecting a quarter-on-quarter increase of 1.5 per cent.