Mortgage arrears top 6 per cent

More than 6 per cent of residential mortgages were in arrears at the end of March, and the stock of repossessed homes held by lenders had risen to 692, new figures show.

Central Bank figures published today show that 49,609 home loans, which represents 6.3 per cent of all private residential mortgages, were in arrears for more than 90 days at the end of March. This compares to an arrears level of 5.7 per cent at the end of December.

Almost 63,000 of all residential mortgages were classified as restructured by the end of the quarter. Of these, more than 26,000 had some degree of arrears.

The figures also showed an increase in the rate of repossessions, with 140 homes repossessed during the first quarter, up from 106 in the fourth quarter of 2010. Of this 140, some 49 were repossessed on foot of a court order while the remaining 91 were voluntarily surrendered or abandoned. This brought the total stock of repossessed residential properties held by mortgage lenders at the end of March to 692.

Bernard Sheridan, director of consumer protection at the Central Bank, urged mortgage holders to contact their lender as early as possible if they are struggling with repayments or at risk of falling into difficulty. “Households should not struggle to deal with their mortgage payments or arrears on their own. Mortgage lenders must work with their customers to help them through their difficulties and, where appropriate, agree a manageable and sustainable solution,” he said.

The Department of Justice said last week that changes in Ireland's bankruptcy laws to help people in difficulty with their mortgages will be published as soon as possible.

Responding to the Central Bank’s figures Rachel Doyle, director of Piba Mortgage Services, said the Government should act quickly so there is clarity around the issue of possible measures to address the problems being experienced by mortgage holders.

Ciaran Phelan, chief executive of the Irish Brokers’ Association, said the Government needs to co-ordinate a debt solution. “Whether the solution is called debt forgiveness or debt restructure, it will ultimately have to happen as the vast majority of these people [who haven't been able to meet their mortage repayments for 12 months or more] will never be able to repay these mortgage,” he said.

Kevin McNerney, broker member of Trusted Advisor Group, said the recent ECB interest rate increase and the certainty of future rate increases is going to tip more people into the arrears bracket, and said the Government must work with the banks to stem this problem.