A new examination of procedures for handing arrears and repossession of properties shows that repossession of a home is a last resort for financial institutions.
The Financial Regulator's study found that lenders accept revised payment arrangements when a person is in financial difficulty and is willing to repay the mortgage. The regulator says that mortgage lenders generally have fair and reasonable procedures in place to deal with arrears and repossessions.
The financial watchdog says that at the end of June 2008, 13,931 mortgage accounts were over three months in arrears. This represents 1.44% of residential mortgages. In December 2006, a total of 11,252 accounts were in arrears, or 1.21% of mortgages.
Between January 2005 and June 2008, credit institutions repossessed 112 residential properties. Other mortgage lenders repossessed 16 properties in that time. This is out of a total of almost one million mortgage accounts.
The reasons given for the arrears included martial or relationship breakdown, unemployment or illness, financial mismanagement and poor cash management.
The Consumer Director of the Financial Regulator, Mary O'Dea, urged people to contact their mortgage providers as soon as they become aware that they will experience difficulty in meeting their mortgage repayments.
'Those who have fallen into arrears should not ignore the problem as lenders are willing to work through difficulties with consumers rather than pursue legal actions, which may be costly to the consumer,' she said.
'Our examination clearly shows that lenders want to engage with you and that even if you fall into arrears, if you engage with your lender, it is unlikely that your house will be repossessed,' she added.
Commenting on the study, the Irish Banking Federation welcomed the fact that mortgage lenders have well established procedures in place for managing arrears.
It added that it agreed with the Financial Regulator that people who experience difficulty in meeting their mortgage repayments to talk to their lender at the earliest opportunity.
The IBF points out that for every 100,000 mortgages issued, three result in repossession here. This compares to almost 200 in the UK.
