Almost 98,000 mortgages in arrears at end of June

Updated: Friday, 23 Aug 2013 14:02

The country's mortgage crisis deepened in the second quarter as the number of households in arrears grew.

The figures hit expectations that a drop in unemployment and pressure on banks to cut deals with borrowers might have brought  some relief.

New Central Bank figures show that a total of 97,874 private residential mortgage accounts on people's homes were in arrears of over 90 days at the end of June.

This represents 12.7% of all such accounts and was up from 12.3% at the end of March. The outstanding balance on these mortgage accounts was €18.6 billion.

Early arrears and longer-term arrears showed different trends in the latest three-month period under review.

The Central Bank noted a 3.3% fall in the number of accounts less than 90 days in arrears, but the number of accounts in arrears of over 360 days rose by 5.6%.

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Today's figures reveal that the number of mortgage accounts who were over 180 days behind on their repayments increased by 3.8% during the second quarter of the year. Quarterly growth in the number of accounts in arrears over two years was 11.3%.

The figures also show that 20.4% of residential mortgage accounts for buy-to-let properties were in arrears of over 90 days, up from 19.7% at the end of March.

A total of 79,357 home mortgage accounts were classified as ''restructured'' by the end of June, the Central Bank said. Of these, it said that over 76% were meeting the terms of their current restructure agreement.

The Central Bank said that of the total restructured accounts at the end of June, 53.3% were not in arrears. It said that restructured accounts in arrears include accounts that were behind on payments before the new arrangements were in place.

A total of 23,553 new restructure arrangements were agreed during the second half of the year. Interest only and reduced payments arrangements accounted for most of the restructures in place (49.7%), down from 55% at the end of March.

Just 0.4% of restructured arrangements included split mortgages while 0.3% were permanent interest rate cuts.

The Central Bank has increased pressure on lenders to get to grips with the arrears issue, which it has described as its biggest domestic policy issue.

Banks were told to propose sustainable mortgage solutions for 20% of distressed borrowers by the end of June. They were also told to raise that to 50% by the end of 2013. They will be have write down the value of the loans if measures proposed are deemed unsustainable.

Reacting to today's Central Bank figures, Frank Conway, from the Irish Financial Review, said that the rise in mortgage arrears was ''a severe disappointment''

The financial expert said that the deteriorating arrears crisis is as a direct result of a number of factors, including falling wages, stubbornly high levels of unemployment and rising prices in a number of key areas such as utility costs.

He also said that banks have not done all they could to tame the growth in arrears.''The decision to not pass on the most recent ECB rate cut to standard variable rate mortgage holders resulted in monthly repayments remaining high,'' he stated.

Commenting on the ''unwelcome'' figures, the Irish Banking Federation said that the number of distressed customers being offered longer-term, sustainable resolutions can be expected to increase over the coming months.

''However, it is important to note that the transition from short-term forbearance to longer-term sustainable resolutions takes time to conclude: detailed assessment of each case is central as is the borrower's consideration of the resolution proposed,'' the federation said.

Lenders hold over 1,000 repossessed homes by end of June

Today's Central Bank figures also show that during the three months from April to June, legal proceedings were issued on a family home in 270 cases. Court proceedings finished in 637 cases in the three month period, and in 350 of these cases, the courts granted an order for repossession or sale of the property.

The Central Bank said that 911 properties were in the banks' possession at the start of the quarter. In the months from April to June, 223 homes were taken into possession by the lenders - 63 of these were repossessed after a court order, while the other 160 were voluntarily surrendered or abandoned. 133 properties were sold in the three month period.

This left the banks in possession of 1,001 principle dwelling houses at the end of June.

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