1 in 9 homeowners in mortgage difficulty

Wednesday 05 December 2012 12.30
The number of those in mortgage arrears has gone up by 6,000 in three months
The number of those in mortgage arrears has gone up by 6,000 in three months

One in nine homeowners are in mortgage arrears or have gone to their bank to restructure their loans, new figures released by the Central Bank show.

The number of people who haven’t paid their mortgage for three months has gone up by 6,000 between the first and second quarter of the year and the number of people in arrears for six months now stands at 40,000.

In total the number in arrears or who have had their mortgages restructured to interest only payments and other arrangements now stands at 95,000 out of 777,000 – the total number of residential mortgages in Ireland.

"Unfortunately these figures were to be expected, but if even one per cent of these people - one thousand people - are repossessed, that is a significant number of people being made homeless.

“Thousands of people in this state are in misery because of mortgage practices in the Celtic Tiger years and politicians are doing nothing about it, it's quite incredible," said David Hall of newbeginning.ie, a voluntary group of barristers helping those facing repossession.

He said it was “incredible” to hear the minister for social protection, Joan Burton, say the banks had to engage more with the public.

“The government runs the banks. She should be calling the banks in for a meeting now, saying I want a meeting now. What planet is she on?” he said.

The mortgage data to the end of June 1011 shows that 55,763 mortgage holders - or 7.2% of all private residential mortgages - were in arrears of more than 90s days in the three months to the end of June.

The number of repossessions are also on the up – but the figures are lower than they could have been because of a challenge by newbeginning.ie meant many court actions taken by the banks have been adjourned.

Frank Conway director of personal finance advice company, Money Coach said mortgage owners face even more hardship this winter with fuel bills set to increase by 12 to 15%.

“The July ECB rate hasn’t kicked in and the cost of electricity and gas is about to go up. People are struggling with basic needs, such as heating a home, they are under enormous pressure and this is undermining people’s ability to pay,” he added.

The property crash has also restricted people’s options with the majority of those who bought homes in 2005, 2006 and 2007 now unable to sell their homes because of negative equity.

The scale of the collapse was reinforced by separate Central Statistics Office figures which revealed that house prices dropped 12.5% in the year to July 2011 with the peak to trough decline now at 40% nationwide.

In Dublin where house prices mushroomed the decline is 49% since 2007.

The Irish Central Bank’s mortgage data shows the most common restructuring is switching homeowners from capital repayment to interest-only payments.

The other forms of restructuring by type are:

  • Reduced payment (greater than interest only)
  • Term extension
  • Reduced Payment (less than interest only)
  • Arrears Capitalisation
  • Hybrid
  • Payment Moratorium
  • Other