THE NUMBER of people in mortgage arrears has climbed to nearly 6 per cent of the total market, while the rate of repossessions has also accelerated, figures released by the Central Bank indicate.
The figures, published yesterday, show a dramatic worsening of the situation over the last 12 months. Account holders behind on their payments by more than 90 days now owe €8.6 billion. Some €6.2 billion of that is owed on accounts more than 180 days in arrears.
At the end of 2010, 44,508 mortgage accounts, or 5.7 per cent of residential mortgages, were in arrears of at least 90 days, compared with 28,603 accounts at the end of 2009. This represents an increase of 55.6 per cent.
The number of accounts in arrears at the end of last December was 10 per cent higher than at the end of last September, although the rate of increase in people falling behind on payments slowed marginally from the 11.1 per cent increase in the third quarter of last year.
The figures show there are 31,338 mortgage accounts, or 4 per cent, more than 180 days in arrears. The arrears trend shows these long-term arrears are up by more than 3,000, while short-term arrears are up only 700. This indicates long-term arrears are growing at four times the rate of short-term arrears.
The Central Bank said 106 homes were repossessed during the last quarter of 2010. Of those, 34 were repossessed on foot of court orders and 72 following voluntary surrender or abandonment. This compares with 81 repossessions in the third quarter of last year and 101 in the last three months of 2009.
The report is the first to include data on restructured mortgages and indicates 59,229 residential mortgage accounts were categorised as restructured at the end of last year. Of those, 35,205 are performing and not in arrears. The Central Bank said the number of restructured loans highlighted the fact that arrangements are now available to borrowers who seek help in dealing with pre-arrears or arrears difficulties.
The revised code of conduct on mortgage arrears, which came into effect at the beginning of the year, enhances protection afforded to people in arrears or pre-arrears. The bank said it was essential that borrowers engaged early with their lenders to benefit from the protection afforded under the revised code.
Just over 38 per cent of mortgages restructured in the last quarter switched to interest-only, while reduced payments also comprise 28.3 per cent of restructured loans.
“The latest statistics are a major concern as they only factor in arrears through to the end of December 2010,” said moneycoach.ie director Frank Conway. He said they did not factor in the most recent interest rate increases announced by banks.
Irish Brokers Association chief executive Ciarán Phelan said with 10 per cent of homeowners “now unable to meet their full mortgage repayments and the level of arrears continuing to spiral” there is a growing need for the next government to devise “a comprehensive solution”. He said while the current policy of forbearance was welcome it was “simply deferring and exacerbating the problem”.
“Our brokers need to be able to offer their clients clear financial advice but with uncertainty over the changes that need to be made to our debt laws, and inconsistency as to how lenders will respond to proposals from homeowners, it’s difficult to advise. We believe that the new government will rectify this situation as this financial time bomb will almost certainly implode within the new government’s term in office,” he said.
MORTGAGES BY THE NUMBERS:
€8.6bnamount owed in arrears
€6.2bnamount owed in accounts more than 180 days in arrears
6 %mortgage holders in arrears
106repossessed homes in last quarter of 2010
44,508mortgages in arrears at end of 2010
59,229restructured mortgage accounts