mortgage arrears

Almost half ‘favour making it easier to repossess if a mortgage is in arrears’

28-04-21

This post is re-published from an article by  Charlie Weston, Independent.ie

Almost half of people surveyed are strongly in favour of a tougher stance being taken against mortgage holders in serious arrears – if it leads to lower mortgage interest rates.

Men, younger people, those in higher social groups and Dublin residents are more likely to favour making it easier to repossess properties when the mortgage is not being paid, according to a poll by Red C for price comparison site Bonkers.ie.

Banks claim that a combination of legal costs, judicial delays, and a lack of success in repossessing homes where mortgages are heavily in arrears are key factors in keeping mortgage rates high here.

Mortgage rates in this country are second highest in the eurozone.

High levels of arrears have been a persistent problem of the Irish banking market for more than a decade now.

Almost half of those in arrears have been in that position for more than two years.

One in 10 has been in arrears for more than a decade now, according to Central Bank figures. This works out at 5,266 accounts in arrears for more than a decade.

Now research conducted by Red C for Bonkers.ie has found that many are losing patience with those who are in long-term arrears.

It has revealed strong support among Irish people for a toughening of the rules around home repossessions to bring Ireland closer into line with European norms if it also means mortgage borrowers can benefit by availing of lower interest rates.

A survey of just over 1,000 adults during March showed that 45pc of people say they are strongly in favour of a tougher stance being taken on borrowers who are in arrears if this would lead to lower mortgage interest rates as a result. This compares with 23pc who are strongly against.

The research was carried out before Belgian-owned bank KBC said it was considering exiting the Irish market, citing the “challenging” nature of doing business here.

Mortgage rates in Ireland are double the eurozone average and the second highest in the currency bloc.

Average interest rates on a new mortgage in Ireland are around 2.79pc, which compares with an average of 1.27pc in the eurozone and a rate as low as 0.67pc in Finland.

A recent report commissioned by the Banking and Payments Commission, the banking industry’s lobby group, showed that in cases where banks seek court action to repossess a home, they are only successful 11pc of the time on average in Ireland.

This compares with 46pc in the European Union.

This means Irish banks have higher levels of non-performing loans on their books than banks in the rest of Europe. In turn this means borrowers here have to pay higher interest rates.

“The simple fact is that lending in Ireland is risky and a big reason for that risk is that banks struggle hugely to enforce security when loans go heavily into arrears,” Daragh Cassidy, head of communications at Bonkers.ie, said.

David Hall of the Irish Mortgage Holders Organisation, which campaigns for borrowers, said he too was frustrated with how long it was taking to get to grips with the arrears crisis.

He accused banks of failing to engage with those in long-term arrears and said the personal insolvency regime needed to be streamlined and made less legalistic.

Mr Hall said vulture funds own most of the mortgage cases and he said banks cannot be trusted to pass on rate cuts even if they sell more distressed mortgages.

 

Whether you are a first time buyer, moving home, looking to switch lender , should you have any concerns about the issues raised in this article,  or investing in a buy-to-let property, why not chat to a Seaspray mortgage adviser today about finding the mortgage that’s right for you- tel.+353 1 7070 000     or email     john.finnamore@seasprayfs.ie

EON

Seaspray Financial Services Ltd trading as Seaspray Private and Seaspray Mortgages is regulated by the Central Bank of Ireland with registered number C165527

  

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