One in eight mortgages is in some form of financial distress
ONE in eight mortgage accounts is in some form of financial distress.
This means that not all the repayments will have been made when the home loan reaches the end of its term, the Central Bank said.
The figure represents one of the starkest indictors yet of how intractable the mortgage arrears crisis is proving some 10 years after the financial collapse.
Deputy Governor Ed Sibley demanded more action from banks and other lenders to resolve the long-running mortgage arrears issue when he revealed that 13pc, or 95,000, mortgage accounts are displaying some form of financial distress.
The stark figures came in a speech he made to the Banking and Payments Federation of Ireland, the lobby group for banks.
He said: “More action is needed by lenders to resolve long-term mortgage arrears, to support distressed borrowers and improve the functioning of the mortgage market for all.”
Mr Sibley said lenders need to do more to resolve long-term mortgage arrears.
However, full resolution cannot be delivered solely within the financial system, he added.
And he urged borrowers to pay what they can towards their mortgage.
If people pay what they can it will help reduce the accumulation of arrears, and reduce their financial burden.
“Borrowers who do not engage, and who do not pay anything towards their mortgage, are most at risk of repossession.”
The one in eight, of 13pc, of mortgage accounts that are facing repayment shortfalls when the term of the home loan is reached are made up of a number of different categories, the Central Bank said.
It released four research reports on mortgage arrears to accompany Mr Sibley’s speech to the bankers.
Accounts facing an end-of-term shortfall include those currently in arrears.
They also include mortgage accounts where the holders have not made full capital and interest monthly payments for the last 12 months under an existing alternative repayment arrangement.
Also included in the one-in-eight accounts in trouble are situations where repayments under an existing alternative repayment arrangement will not lead to full repayment of the account by the maturity date.
Other categories include accounts that are classified as in default or non-performing under international accounting standards.
Mr Sibley said that there are huge issues for those households and individuals suffering the stress and uncertainty of having significant arrears and being at risk of losing their homes.
But there are also wider issues associated with this legacy – including the cost of credit for all, and the attractiveness of the Irish mortgage market for new entrants, he said.
One of the academic papers found that the numbers in long-term arrears remains high despite more than a decade of the problem persisting.
There are close to 29,500 cases of long-term arrears for home mortgages. These are defined as those with arrears equivalent to more than one years’ worth of repayments.
The figure is down from 61,000 in June 2014, at the peak of the mortgage arrears crisis.
Mr Sibley said the combination of supports offered by lenders and the Government during the pandemic had been crucial in minimising the economic effects of the Covid-19 emergency on households and businesses.
However, as Government supports are tapered, some borrowers will require further support.