Over 60s account for a quarter of long-term mortgage debt

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More than 60 borrowers are responsible for investigating 29,400 long-term mortgage debt cases in a quarter, putting them at risk of losing their homes unless lenders offer more “extensive or ambitious” ways to restructure their loans. central bank

Central Bank Deputy Governor Ed Sibley said on Tuesday at the Banking and Payments Federation of Ireland (BPFI) webinar on problem debt that the solutions offered by banks and loan servicing companies “do not take into account the scale of financial and demographic problems.”

Payments

“Broader innovation is required, based on addressing key accessibility issues; and the longer-term cost of the loan to the borrower – and therefore should not overly rely on long-term agreements to pay only interest, ”he said.

A central bank document on long-term debt, also released on Tuesday, said solutions to suspend or substantially reduce payments ahead of a loan that will ultimately be paid off through the sale of real estate “buy precious time” to allow households to stay at home for an agreed period and minimize monthly expenses.

It says the possibilities for this are highlighted by recent innovations in personal insolvency mechanisms.

It states that a range of solutions can be offered to older borrowers with moderate solvency, especially those with positive equity.

“A combination of modifications that are already regularly used in lender packages (for example, capitalization of arrears combined with term extensions, interest rate cuts, or mortgage splits) and debt forgiveness in some cases can enable many in this group to pay off their mortgages. maturity and retention of ownership of the housing, “- said in the message.

It also notes that there is a group of borrowers who can afford to pay off most, if not all, of the mortgage balance.

Although the level of long-term arrears, where borrowers are more than a year late, has dropped by more than 50 percent from a peak of almost 61,000 loans in 2014, they now represent more than 56 percent of all owners. -large overdue loans.

Focus

The increased regulatory focus on long-term disasters stems from lenders facing a sharp increase in NPLs over the next 12 months, as the true cost of Covid-19 to households rises as government support cuts. More than half of long-term debt cases no longer belong to major banks.

Still, Mr Sibley said lenders “seem to be” ready and committed “to address the financial problems posed by the pandemic based on plans they have presented to supervisors. Most borrowers who took advantage of temporary payment gaps last year have since returned to normal payments.

The Central Bank’s document on long-term debt states that half of such cases are attributed to borrowers who are classified as “non-cooperating”.

“In the event of continued long-term non-cooperation, a functioning legal system to ensure that collateral is enforced for lenders will continue to be critical to the effective functioning of the mortgage market for all Irish citizens,” said Mr Sibley, adding that “borrowers are never too late start cooperation with your creditors ”.

Of the nearly 10,000 legal proceedings initiated since the financial crisis, 54 percent ended without a title deed. Most of these cases have been reviewed or settled.

Meanwhile, another central bank document released on Tuesday showed that lenders estimated that borrowers issuing 95,000 loans to owner-tenants – or 13% of the total – are currently unable to pay off all of their debt by the end of the loan term.

According to him, almost 63,000 accounts have a deficit of more than 10 percent of the balance sheet. Almost 45 percent of these cases are classified as long-term debt.



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