The Central Bank in publishing last month the latest statistics on residential mortgage arrears presents a worrying picture. Six years after the onset of the financial crisis one in six mortgage holders remain in arrears on their loan repayments. The large number of distressed mortgage holders reflects the slow progress made in resolving the problem of the high levels of mortgage debt. A breakdown of the residential mortgage accounts data shows an overall decline in arrears in the third quarter of 2014 – the fifth consecutive quarterly fall. However, the number of mortgage holders over 720 days – two years – in arrears has continued to rise, albeit at a slower pace. This latter group, which number 37,488 mortgage holders, represent one third of all accounts in arrears, and are responsible for two thirds (over €8 billion) of the arrears outstanding on all distressed mortgages.
David Hall, director of the Irish Mortgage Holders' Organisation, has warned that as so many are in long-term arrears on their loan repayments, some 20,000 are now at risk of losing their homes. Central Bank figures show that in the third quarter of 2014 legal proceedings were issued against defaulting mortgage holders in 2,514 cases, with the courts increasingly granting orders for the repossession or sale of the property. By the end of September lenders were in possession of 1,393 properties.
Repayment arrears on residential mortgages on buy-to-let (BTL) properties also present a major challenge. There, over a quarter of all BTL accounts were in arrears, with those over 720 days late in their loan repayments owing €4.8 billion, and accounting for three quarters of all outstanding arrears. With both residential and BTL mortgages, the most intractable problem is that posed by mortgage holders more than two years in arrears on their repayments. The banks have been slow to address the problem, and have been unwilling to write off some debt. And while the Central Bank can recommend solutions – such as split mortgages – it cannot compel the banks to adopt them. Mr Hall’s warning should be heeded.