Every eighth mortgage loan is in dire financial straits

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ONE in eight mortgage accounts is in dire financial straits.

This means that not all payments will be made after the expiration of the home loan, the central bank said.

The number is one of the clearest indicators of how intractable the mortgage debt crisis is, some 10 years after the financial collapse.

Deputy Governor Ed Sibley called on banks and other lenders to take more action to tackle a long-standing mortgage debt problem when he said 13 percent, or 95,000, of mortgage accounts were showing some form of financial crisis.

The absolute numbers were presented in a speech he gave to the Irish Banking and Payments Federation, a lobbying group of banks.

He said: “Lenders need additional action to settle long-term mortgage debt, to support problem borrowers and to improve the functioning of the mortgage market for everyone.”

Mr Sibley said lenders should do more to settle long-term mortgage debt.

However, a complete settlement cannot be achieved exclusively within the financial system, he added.

And he encouraged borrowers to pay their mortgages as much as they can.

Paying as much as they can will help reduce the accumulation of debt and reduce their financial burden.

“Borrowers who do not work and pay nothing on their mortgages are most at risk of repossession.”

According to the Central Bank, one in eight out of 13 mortgage accounts that face the problem of default on mortgage maturities falls into several different categories.

He released four research reports on mortgage debt that accompanied Mr Sibley’s address to bankers.

Accounts that are in deficit at the end of the term include overdue accounts.

They also include mortgage accounts whose owners have not made monthly capital and interest payments in the past 12 months under the existing alternative repayment mechanism.

Also, problem accounts “one of eight” include situations where payments under the existing alternative repayment scheme do not result in full account repayment by maturity.

Other categories include accounts that are classified as default or non-performing according to international accounting standards.

Mr Sibley said there are enormous challenges for those households and individuals who suffer from the stress and insecurity of significant debt and are at risk of losing their homes.

But there are broader concerns with this legacy, including the cost of credit for everyone and the attractiveness of the Irish mortgage market to new entrants, he said.

One of the scientific papers found that the amount of long-term debt remains high, despite the fact that the problem has persisted for more than ten years.

There are about 29,500 cases of long-term mortgage debt. They are defined as persons with arrears equivalent to a repayment of more than one year.

That figure fell from 61,000 in June 2014, at the height of the mortgage debt crisis.

Mr Sibley said the combination of support offered by lenders and the government during the pandemic was critical in minimizing the economic impact of the Covid-19 emergency on households and businesses.

However, as government support dwindles, some borrowers will need additional support.

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