Wednesday, 21 September 2011

Record 70,000 Behind On mortgage...

Record 70,000 now behind on mortgage payments...

MORE borrowers will be pushed into arrears on their mortgage payments because of rising unemployment, a ratings agency predicted yesterday as new figures show the number in trouble surged to 68,248 in July.

That figure represents an increase of 12,485 in the numbers who are behind by three months or more on their mortgage payments when compared with last April.

Overall, almost 9pc of homeowners are now in arrears. Ratings agency Moody's said it expected more borrowers to be pushed into arrears as jobless numbers increase.

Moody's figures tend to be more up to date that those of the Central Bank which last month said arrears had risen to 7.2pc in June, leaving 55,763 homeowners three months or more in arrears.

The Moody's figures imply that 22,231 have not paid their mortgage for a year or more, calculations based on their statistics show. These homeowners are at serious risk of losing their homes, home-loan experts said.

Higher arrears figures will increase the debate around the need for long-term solutions for indebted borrowers.

Social Protection Minister Joan Burton is expected to outline tomorrow a proposal from her department for a mortgage review office, similar to John Trethowan's credit review office that probes refusals of bank credit for small firms.

Such an office would review how banks handle mortgage arrears cases.

Critically, it is not expected to recommend any broad debt forgiveness for struggling householders.

Central Bank governor Professor Patrick Honohan suggested at a recent Oireachtas hearing that a mortgage debt office to review decisions by banks on their handling of arrears cases may be needed.

The Department of Finance committee, headed by accountant Declan Keane, is set to report its findings by the end of this month.

Prof Honohan ruled out a blanket debt forgiveness scheme but said that banks were looking at temporary shared ownership arrangements with borrowers.


AIB said last week it was writing off mortgage debts in a few cases but only where houses had been repossessed.

Bank of Ireland said it did not have a policy of writing off debt for borrowers who could not meet mortgage repayments.

Moody's said it expected the level of arrears to continue rising.

The ratings agency said the number of people out of work would rise to 14.3pc, from 13.6pc last year.

Falling house prices will increase the size of losses on defaulted mortgages, Moody's said, adding that house prices had already fallen 43pc from the peak of the housing boom in 2007 to July this year.

There are about 777,000 residential mortgages in the State amounting to €115bn in debt.

Report by Charlie Weston - Irish Independent

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