Mortgage arrears at Irish banks rose 13 per cent in the first three months of the year, the Financial Regulator said today.
At the end of March, 32,321 residential mortgages with a value of €6.1 billion were more than 90 days behind in payments.
This equates to more than 4 per cent of the total of 791,000 property loans in the State, which are worth a total of €118 billion. Some 2.8 per cent of mortgages, or €4.1 billion, were more than 180 days behind.
The figures come only a day after the head of financial regulation at the Central Bank Matthew Elderfield said there was "no silver bullet solution" for mortgage arrears.
Over the quarter, overall mortgage debt outstanding for private residential mortgages fell by more than €285 million.
However, fewer cases are being brought to court, with lenders applying to the courts to enforce the debt or security in 161 cases, a fall of 30.9 per cent on the preceding quarter. The arrears on these cases were worth €5.9 million on loans with a value of €59.2 million.
During the quarter, the regulator said 225 enforcement proceedings were concluded, a fall of 40 per cent on the last quarter of 2009.
Repossession orders were granted in 100 cases, with 13 properties surrendered voluntarily and nine abandoned. The regulator said 98 of the remaining cases were settled through renegotiating the mortgage term and conditions.
At the end of March 2010, mortgage lenders had a stock of 456 repossessed residential properties.
Mr Elderfield said yesterday mortgage arrears may be “the biggest legacy issue” from the financial crisis.
Addressing the Insurance Institute of Ireland, Mr Elderfield said there was a “moral hazard” issue in providing support for struggling borrowers.
“We must be careful that any approach doesn’t provide financial incentives for the arrears problem to get worse,” he told a packed gathering at the RDS in Dublin.
“And, in seeking to assist households in difficulty, we need to recognise that the cost of any support will be borne by those neighbours who avoided excessive borrowing themselves or are gritting their teeth and meeting their obligations.” Taxpayers would have to bear the cost of any support mechanism over arrears, he said.
The Irish Banking Federation (IBF) said the figures showed banks which agree to postpone loan repayments are greatly assisting distressed homeowners. IBF chief executive said mainstream lenders "remain committed to doing everything possible to help people with genuine repayment problems to manage their debts and to stay in their homes".
Fine Gael social and family affairs spokeswoman Olwyn Enright said there was a clear need to help those who genuinely cannot pay their mortgage.
“While the Financial Regulator is rightly concerned about the views of the average next-door neighbour, my experience is that the very same neighbour is terrified that they will be next to lose their home," she said.
“It’s about time that Social Protection Minister Éamon Ó Cuív offered some kind of assistance to those genuinely in need. For a start he should finalise and publish the Department’s review of mortgage interest supplement, which has been under way for two years," she said, adding this supplement was "only a stopgap measure".
“The Government promised last year to bring in new measures to protect the family home. They include allowing the bank to take equity or part ownership in a home, which would then be leased back to its residents. Yet this measure has never been implemented."
Labour's spokesman on housing Ciarán Lynch said the figures were shocking but did not even show the full picture.
"For example, the figures do not include financially stressed householders who have negotiated with their lenders to take a payments holiday or to make interest-only payments," he said. "The 13 per cent increase in households in arrears for more than 90 days is particularly alarming, particularly when the Government has shown all the dynamism in dealing with this crisis, as a deer caught in the headlights."
Housing charity Respond claimed the true figure of borrowers in trouble is twice that reported.
"These figures are only the tip of the iceberg. Tens of thousands have been forced to revert to interest-only mortgages, extend the term of their mortgage or in some cases take a payment holiday,” spokeswoman Aoife Walsh said. “These cases are not being highlighted by our banks so in reality 70,000 homeowners could be in danger of default.”
Congress president Jack O’Connor today reiterated his support for Ictu’s “ten point plan” which includes a scheme to assist people threatened with repossession of their homes.
He said the plan would benefit people who are enduring misery and assist in generating consumer confidence and releasing funds for economic recovery.
“It is absolutely inconceivable that we are able to pour billions into the black hole of the Anglo Irish Bank without any prospect of a cent in return, while at the same time ordinary citizens who are doing their best to put a roof over their families are being crucified and left helpless as a result of the activities of speculators and parasites who seem to continue enjoying all the comforts life can provide with impunity,” he added.
Legal rights group FLAC (Free Legal Advice Centres) said it was concerned over the figures, and called for a comprehensive set of solutions to be put in place as a matter of "extreme urgency". The group said about one in five calls on debt to its information line were about mortgage arrears, and a quarter of those visiting advice centres on debt-related matters were seeking help on mortgage payments.
