Banks 'dragging feet' on arrears
Irish banks are still dragging their feet when it comes to dealing with mortgage arrears, the Central Bank has warned.
In its first quarterly bulletin of the year, the bank said lenders were not doing enough to tackle “the long-term nature” of arrears.
While acknowledging that more debt resolution measures were being rolled out by banks, the Central Bank said the level of implementation, through either debt restructuring or loan recovery, was far from adequate.
“While there is a delicate balance to be struck here, it is critical that financial institutions move to deal decisively with the issue of long-term mortgage arrears,” it said.
According to the Central Bank’s latest data, 112,916 mortgage accounts with €24.7 billion of debt were in arrears of 90 days plus at the end of September 2012.
This comprised €7.9 billion in buy-to-let investments and €16.8 billion in owner-occupier borrowings.
The Central Bank said it would continue an “intensive step-by-step” engagement with the banks on the issue until the growth in arrears is stemmed.
In its latest economic forecast, contained in the bulletin, the bank revised downwards its growth projections for this year on the basis of a less favourable international outlook.
Its economists predicted that gross domestic product would grow by 1.3 per cent in 2013, lower than the 1.7 per cent forecast three months ago.
The bank also said that gross national product, which excludes the impact of multinationals on the economy, would grow by 0.5 per cent this year, down from the 0.7 per cent previously forecast.
On the basis of consensus assumptions from the main international economic institutions, the bank is projecting a slow recovery in external demand over the next two years which would see GDP grow by 2.5 per cent in 2014, with GNP expected to rise by 1.4 per cent.
However, it cautioned that there was a strong element of uncertainty attached to these projections, with net exports set to remain the main engine of growth in coming years.
“The outcome will be particularly sensitive to developments in the external environment,” it said.
The bank also projected a 0.3 per cent increase in employment this year. While modest, it would mark the first annual increase in employment since 2007.