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Mortgage arrears rise sharply in Ireland

Interest rate hikes, fuel costs and austerity measures are pushing people into arrears as new figures show the house price decline continues

The number of people in mortgage arrears in Ireland has more than doubled since the end of 2009 as interest rate hikes, pay cuts and austerity measures take their toll.

The Irish Central Bank’s quarterly report on mortgage arrears shows that one-in-nine homeowners are now finding it difficult to keep up with monthly payments and are either officially in arrears for more than 90 days or have struck a deal with their banks to restructure the mortgage.

The mortgage data to the end of June shows that 55,763 mortgage holders – or 7.2% of all private residential mortgages – were in arrears of more than 90 days in the three months to the end of June.

Some 40,000 householders are behind on payments by more than six months – more than double the figure in September 2009 when the central bank’s quarterly mortgage report began.

“The figures are going up by about 5,000 a quarter and this last quarter is up by 6,000 and there is no sign that this is going to ease off,” said Frank Conway, director of personal finance advice company, Money Coach.

He says the interest rate hikes and the 12-15% increase in gas and electricity prices will push more and more into arrears this winter.

“The July ECB rate hasn’t kicked in and the cost of electricity and gas is about to go up. People are struggling with basic needs, such as heating a home, they are under enormous pressure and this is undermining people’s ability to pay,” he added.

Negative equity is also restricting people’s options with the majority of those who bought homes in 2005, 2006 and 2007 now unable to sell their homes because of the property crash.

The scale of the collapse was reinforced by separate Central Statistics Office figures which revealed that house prices dropped 12.5% in the year to July 2011 with the peak to trough decline now at 40% nationwide.

In Dublin, where house prices mushroomed the decline is 49% since 2007.

The number of repossessions in Ireland is also rising, but the volume remains relatively small thanks to a recently introduced laws which force banks to restructure loans rather than throw people out of their homes.

The Irish Central Bank’s mortgage data show the most common restructuring is switching homeowners from capital repayment to interest-only payments. © Guardian News & Media Limited 2011 | Use of this content is subject to our Terms & Conditions | More Feeds