Central Bank officials have warned the Oireachtas it is “very clear” mortgage arrears levels are too high in Ireland, with 13,000 consumers failing to keep up with payments.
Officials from the regulator were before the Oireachtas finance committee on Wednesday to discuss the role of non-bank entities in the Irish housing market and their impact on residential mortgages.
Colm Kincaid, deputy governor, consumer and investor protection, said it was “very clear” mortgage arrears were “too high in Ireland”.
“There are too many households still in mortgage arrears, and it is taking too long to resolve those things,” he said. “So that’s really what we’re focused upon.
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“Our primary concern is that we continue to make progress in the mortgage arrears that are there [because] we still have too many mortgage arrears in the system.”
Domhnall Cullinan, the Central Bank’s director of banking and payments, said there are “still 13,000 accounts in arrears with the banks, and 5,000 of those in arrears for greater than 90 days, so it’s an ill wind I suppose”.
“But they have built up an awful lot of muscle memory in terms of how to deal with non-performing loans over the last 16 years,” he said.
“That’s the truth of it. And I don’t think that’s going to have gone away. So I think they will be much more capable of stepping into this space now than they were 16 years ago.”
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The Central Bank insisted its mandate in relation to non-bank lenders was restricted to regulation, but was accused by Sinn Féin finance spokesman Pearse Doherty of failing to protect consumers.
“I’ve seen your opening statement,” he said. “I’m just going to be blunt about it. It could have come from the industry. I’m very, very disappointed with the Central Bank.
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“I have to say that straight up to you. If we had a number of the vultures here they would be giving the same answers.
“The Central Bank has a role in terms of consumer protection, and I believe the Central Bank is not living up to that. There are citizens here that are being absolutely fleeced with sky-high interest rates by these vulture funds.”
He said there were more than 9,000 families being charged interest rates of over 6 per cent interest rates by “vulture funds”.
“You’re basically telling the committee: ‘Well, the terms and conditions allow this.’ Sure we knew the terms and conditions allowed it. So really what I am interested in is whether the Central Bank has any view on the high interest rates being charged?”
Aisling Menton, Central Bank head of retail credit, said non-bank lenders do engage and negotiate with distressed borrowers.
“There is hope for people,” she said. “We have seen there are solutions out there with non-bank lenders. People can get reduced rates when it gets to be unsustainable.”
