Over 50% of Irish mortgages in negative equity - DavyFriday 17 August 2012 22.06
Davy stockbrokers has said that over 50% of Irish mortgages are in negative equity.
In an analysis of the mortgage arrears situation, Davy has forecast that owner-occupier arrears will peak at 16.5% from a level of 13.4% in the first quarter of this year.
The stockbrokers said banks need to move beyond short-term mortgage measures.
It said that they need to take serious action about writedowns and repossessions, particularly in the buy-to-let market.
Davy said the key factor for people falling behind in their mortgage repayments has been labour market developments.
It stated: "Falling employment and rising long-term unemployment has reduced households' ability to pay."
However, it noted that the sharpest falls in Irish employment now appear to have passed and it predicts that employment will rise marginally next year.
The stockbrokers also said that the low level of repossessions in Ireland was remarkable.
The Free Legal Advice Centre has welcomed the report, saying short-term measures such as extending the term of a mortgage are not enough.
Speaking on RTÉ's News at One, FLAC's Noeline Blackwell said the measures fail to address the core issue that many people simply cannot afford their mortgages.
Ms Blackwell said: "If the loan is too big to ever repay then either someone must abandon the loan, which would lead to repossession, which is not the preferred option, or you have to restructure the loan by writing down the principle."