Ulster Bank hopes to allow some arrears customers to make mortgage payments in retirement

Tuesday 08 April 2014 17.32
Ulster Bank's Stephen Bell said the bank was not in favour of post-retirement mortgage payments but would permit them in some cases
Ulster Bank's Stephen Bell said the bank was not in favour of post-retirement mortgage payments but would permit them in some cases

Ulster Bank is applying for permission to allow some customers in arrears pay part of a split mortgage in retirement.

Speaking at the Oireachtas Finance Committee, the bank's chief risk officer Stephen Bell said it had applied for approval to the Central Bank for the new arrangement.

He said they had not received any resistance from the authority on the issue, and any solutions would be based on a customer's income and expenses.

He stressed that the Ulster Bank was not in favour of people paying part of a mortgage in retirement but would permit it in some cases.

Mr Bell also confirmed that it had 4,300 mortgages in a "legal process" while a further 3,000 court cases in the pipeline.

He said a portion of the existing cases where there was meaningful engagement had been adjourned, but that they were still categorised as legal cases.  

Fianna Fáil's finance spokesman Michael McGrath said the fact that three in ten of those in arrears were in a formal repossession was "chilling".

In his opening statement to the committee, Ulster Bank's chief executive officer Jim Brown said the bank's arrears situation had shown signs of improvement since he appeared before them in September.

He noted that 2,500 customer had moved out of arrears since that time, while the number of arrears customers who have not engaged with the bank and have not made contributions to their mortgage since the summer has reduced from 35% to 14%.

Whilst a decrease in arrears is expected, he said, the bank also expects to see a continued increase in the number of mortgages in arrears for more than two years, due to customers refusing to engage with them. 

Mr Brown said people not paying anything towards their accommodation was unfair to those who were paying their mortgages. 

There are approximately 4,000 people who had not paid anything for two years or longer, Mr Brown said, and that the only route was to go down the court process, but it was not the bank's intention to repossess.

Instead, Mr Brown said he would prefer to negotiate payment options with customers.

However Mr Brown did say that there had been 136 legal repossession by the bank to date, of which 93 were voluntary.  

He also said the ‘Economic Concession’ product offered by Ulster Bank, which features a discounted interest rate as low as 0.5%, continues to be the most popular solution for customers.

Mr Brown referenced research conducted by Ronan Lyons on the bank's mortgage book, which revealed that paying the mortgage is more affordable than the equivalent rent when more aggressive restructuring models - such as interest only or a 50/50 split mortgage - are considered.

Mr Brown also stressed that in terms of debt write-off, Ulster Bank does not write off mortgage debt, as they do not believe it is an appropriate solution.

He also alluded to a the mortgage market showing signs of improvement, noting that Ulster Bank’s mortgage lending has increased by 32%.

In response to a question from Committee Chair Labour Deputy Ciaran Lynch, Mr Jim Brown said Ulster Bank wanted to build a better bank for their customers and its parent group RBS was committed to staying in Ireland.

People Before Profit TD Richard Boyd Barrett asked about tenants of buy-to-let borrowers, where often a lease might have expired.

Mr Brown said they were conscious of the impact this had on tenants and they looked on it on a case-by-case basis.

Mr Brown said it was in the bank's interests to keep tenant in a property where it makes sense, but they still had obligations to the borrower.