THE NUMBER of people who can no longer afford to pay their mortgages continues to grow significantly and, according to figures to be released by the Central Bank today, about 55,000 residential mortgages, or 7 per cent of the total market, are now in arrears of more than 90 days.
The Central Bank quarterly report will also show that nearly 70,000 mortgages are now classified as restructured mortgages, up from just over 63,000 three months ago, and will report a slight tapering off of the number of court orders granting home repossessions, although year-on-year it continues to climb.
The Central Bank figures will show that about 55,000 home loans, or 7 per cent of the market, were in arrears 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 the end of last year.
The news that more than 1,500 people each month between April and June fell at least three months behind in their payments is likely to lead to an increase in calls on the Government and the financial sector to establish a co-ordinated programme to help people with unsustainable borrowings.
Minister for Social Protection Joan Burton yesterday called on lenders to be more proactive with those having difficulty meeting their mortgage repayments and accused the banks of refusing to properly engage with consumers in distress.
“Everybody has to be able in the first instance to approach the institution that provided them with the mortgage, and I don’t think that the banks and the mortgage institutions are actually engaging with them sufficiently.”
She said the banks need to deal more constructively not only with those already in financial distress but also the people at risk of falling behind in their repayments.
“If you let people get deeply into debt it becomes much more difficult to actually help them get out of debt. So we need an early warning system.”
The Irish Banking Federation accepted debt forgiveness would have to form part of a solution to the mounting personal debt crisis, but a spokesman said a blanket approach to mortgage arrears would be “totally wrong”.
Spokesman Felix O’Regan said many people in arrears would be able “to find it is a manageable challenge” and would be able to work out a solution with their lender, “but for all the forbearance in the world there is a group who will not be able to deliver a workable solution to their mortgages. We don’t know what level those unsustainable mortgages are at but talk of blanket debt forgiveness it totally wrong. We need to address a very small targeted group.”
Mr O’Regan said the Law Reform Commission’s proposals on personal insolvency and debt management that were published last year should serve as the blueprint for “finding the best targeted solutions”.
Among the proposals published by the commission were recommendations on debt relief in certain circumstances.
Mr O’Regan conceded there was “work to be done in the debt forgiveness space” but stressed it would need to be determined “for whom it could be applicable, in what circumstances and over what timeframe”.