Households in arrears 'may rise'
More than 36,000 debt-hit householders are three months behind with payments and the figure is set to worsen as mortgage interest hikes hit home, it has been revealed.
The number of failing loans increased by about 4,500 between March and June making up 4.6% of all mortgage accounts, the Financial Regulator said.
And with 466,923 unemployed and up to three interest rate rises forecast for next year, campaigners warned the debt crisis and fear of homelessness could deepen. Housing charity Respond warned tens of thousands were at risk of default after lenders, including AIB, Bank of Ireland, EBS, Permanent TSB, ICS and KBC hiked rates by up to 0.6% during July and August.
"Lenders need to realise that increasing rates is simply going to increase the financial pressure on people and will eventually lead to a considerable increase in arrears, even larger than what we're seeing currently," spokeswoman Aoife Walsh said. "Homeowners in Ireland are particularly vulnerable because there is no limit on the number of interest rate increases lenders can impose."
Some 387 homes were repossessed in the year to the end of June but banks applied for 170 court actions against struggling homeowners - an increase of 5%.
Respond said the best solutions to mortgage debt included forgiveness, non-court based settlements, mediation and write off leftover debt on successful completion of an agreed repayment programme.
Pat Farrell, IBF chief executive said despite the rise in arrears the figures showed mainstream lenders were focused on forbearance. "IBF mainstream lenders remain committed to doing everything possible to help people with genuine repayment problems; and early, constructive engagement between the borrower and lender is key to this," he said. Mr Farrell said his members were working on setting in train further safeguards and reassurance for distressed homeowners through the Mortgage Arrears Resolution Process (Marp).
Mortgages in Ireland are worth a total of 6.9 billion euro, the latest quarterly report from the Regulator revealed. It showed 36,438 households were 90 days or more in arrears at the end of June with 24,797 of these 180 days behind with payments. This compared to 32,321 in arrears for more than 90 days at the end of March.
Piba, the country's largest group of independent mortgage and insurance brokers, said it was a very worrying cycle for homeowners in difficulty and for the wider economy.
Rachel Doyle, Piba director, said rules on how to deal with debt-hit homeowners should take into account the still rising unemployment figures. "It needs to take account of the fact that it will take some time for the jobs situation to improve and mortgage holders need to be assisted in a very practical and reasonable way through this period," she said. "We believe that arrears should only begin to be counted after the first 30 days from the missed payment have elapsed."