Thousands still in arrears on mortgages more than a decade after the financial crash

Thousands of homeowners have still not resolved their chronic mortgage debt situation more than a decade after the last financial crash.

he Central Bank is warning of a new rise in arrears cases due to higher mortgage rates and surging household costs.

Close to 6,000 residential mortgage accounts have been in arrears for more than
10 years, according to the latest figures from the Central Bank.

A total of 8,241 are in arrears for between five and 10 years, according to the Residential Mortgage Arrears and Repossessions Statistics for the April to June period.

The number of accounts in arrears for more than a decade have fallen by just two in the last year.

The total number of mortgage holders in arrears for between five and 10 years is down to 1,573 in the past year.

Homeowners in some form of arrears fell by 3,000 in the second three months of this year to 46,000 compared with the same period last year.

At the end of June, 4.4pc of all residential mortgage accounts were in arrears over 90 days, representing 31,645 mortgage accounts.

The Central Bank said there was an incremental downward trend in the number of accounts more than three months in arrears since March 2010.

That was the point that arrears numbers peaked, just after the Celtic Tiger blew up.

For the accounts in arrears, 5,908 are currently part of a legal process.

One-third of these are in the legal system for more than five years.

Banks regularly complain about the length of time repossessions take in the legal system, even when nothing is being paid on a mortgage.

Non-banks account for 74.5pc of all residential mortgage accounts in arrears for more than one year.

A total stock of 63,422 residential mortgage accounts were categorized as restructured at the end of June, representing 9pc of total residential mortgage accounts outstanding.

The total number of restructuring arrangements fell by 1,139 accounts over the quarter, and continues a long-term trend of decline.

The latest figures come after a recent Central Bank academic paper found that up to a third of lower-income Irish mortgage holders could face financial distress trying to meet loan repayments if recent levels of inflation are maintained.

The paper, written by Central Bank economist Tamanna Adhikari, defined a homeowner as being “at risk” of financial distress when their residual income is less than 10pc of their monthly mortgage payments, after meeting home-loan obligations and paying for essential non-housing items, ranging from food and energy bills to routine medical expenses and phone bills.

The economist estimates that in a severe case of Irish inflation amounting to 9.1pc for this year, 32pc of the mortgaged households in the lowest-quarter income range in the State would fall into the “at risk” category.

The paper found the over-55s and households living in rural areas are most at risk of suffering mortgage debt this winter due to rocketing inflation.

Other research from the Central Bank found that a quarter of borrowers in long-term mortgage arrears cases are over 60, leaving them a few years to get on top of the problem debt before they retire.

Leave a Reply

Your email address will not be published.