CENTRAL BANK figures showing a rise in the number of home loans falling into arrears are a symptom of a much greater personal debt crisis that has yet to be decisively addressed by the Government, according to a leading voluntary agency.
According to figures released by the bank yesterday 55,763 home loans, or 7.2 per cent of all mortgages, were in arrears for more than 90 days at the end of June. This compares to an arrears level of 6.3 per cent three months ago, and 5.7 per cent at end of last year.
The data also showed there were 69,837 residential mortgages categorised as restructured at the end of June compared with 62,936 restructured accounts at the end of March. Of this total 39,395 were not in arrears.
The Free Legal Aid Centre (Flac) described the figures as unsurprising and said the increasing number of people falling into arrears was “only one symptom of a much larger personal debt problem”.
It called on the Government to put in place a workable and comprehensive action plan on mortgage and personal debt to “allay the massive fear and uncertainty blighting the lives of so many people in Ireland today”.
Senior Flac policy researcher Paul Joyce said that at the end of 2010, one in 10 mortgages was in trouble. “By March 2011, it was one in nine. Now we see almost one in every eight mortgages is struggling. How long is the Government going to wait before taking decisive action?”
The Irish Banking Federation described the increase in the number of borrowers whose mortgages have been restructured as “the expected outcome of a deteriorating economic situation for some borrowers” and claimed that it illustrated that mainstream lenders were “working responsibly with their customers to manage the situation where the basis for doing so exists”.
Federation chief executive Pat Farrell said the Central Bank figures showed banks were effectively applying the statutory Code of Conduct on Mortgage Arrears, the Standard Financial Statement and other voluntary measures “to work constructively with customers in difficulty”.
“As a result, the figure that we would expect to see increasing – namely the number of restructured mortgages – is doing just that. This was where the focus of federation member institutions would most usefully remain”.
Irish Brokers’ Association chief executive Ciarán Phelan said a doubling of mortgage restructures in the last quarter meant the banks were “starting to understand that this is the only real solution.
“According to these numbers, over 4,000 mortgages in arrears were restructured during the quarter; this number needs to rise significantly if we’re to slow the growing level of arrears,” he said.
He said the restructuring of mortgages “should be set on a longer-term basis of at least five years to create a degree of security for the householder and give them time to get back on their feet; options including debt for equity swops and debt write-off are appropriate particularly as many of these mortgages are simply too big for our reduced incomes in 2011.”