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Home debt crisis remains enormous, warn experts

Central Bank figures showing a slowdown in the numbers entering so-called early arrears fails to capture the huge scale of the home debt crisis, debt experts have said.

The bank said yesterday that 104,693, or about one in seven of all the 757,175 home loan accounts in the State, were failing to make some kind of monthly payment in the first quarter of the year.

That total is down from the 110,366 houseowners who were struggling to meet their mortgage payments in the final quarter of 2014.

However, it said the numbers in long-term arrears continue to grow.

The figures show the number of mortgage accounts in arrears for over 720 days rose to 37,933 in the March quarter from 37,778 at the end of last year.

Those long-term arrears account for €8.33bn worth of outstanding mortgage loans on the banks’ loan books and technically amount to €1.98bn in missed payments by borrowers.

Those who are working on the ground as personal insolvency practitioners and debt advocates say the figures underscore that there has been little or any improvement in the debt crisis.

Mitchell O’Brien of Insolvency Resolution in Waterford and Dublin said there has been no improvement.

“The scale of the problem is enormous. Of course the level of new arrears is going to slow at some stage. That is not the barometer to judge whether the arrears crisis is being addressed or not.

“The level of long-term arrears should by now be coming down dramatically, if there were any sustainable improvement,” Mr Mitchell said.

Ross Maguire SC of advocacy group New Beginning said the Central Bank figures point to an increasing problem of long-term arrears, and that the Government has still to put forward substantial solutions.

“The Government has made indications that it wants to tackle the issue but has not delivered on those intentions. There has now to be ways to price the range of possible options given that there is a wealth of figures on arrears and outstanding balances for people facing long-term arrears,” he said.

Mr Ross said he favoured the Government backing public-private initiatives to take on long-term arrears from the lenders’ balance sheets, a solution he said which would help keep people in their homes.

Ireland’s bailout lenders and private sector analysts continue to press the Government to take more legal proceedings and to facilitate access to the insolvency regime.

The IMF noted in a report in May that mortgages continue to move into long- terms arrears, and said the problem “will require intensified and sustained efforts” from the authorities here.

“Primary dwelling mortgages in deep arrears pose a greater challenge, with many cases of weak bank-borrower engagement generally resulting in recourse to lengthy legal procedures,” the IMF said.

The Central Bank said yesterday that since the start of the home loans crisis in 2009 that 2,832 residential houses have been repossessed.

Gerry Dowling, a co-ordinator of the Money Advice and Budgeting Service in Dublin, said the Government has indicated it plans a new role for Mabs in dealing with the home loans crisis.

The Government last month said it was considering measures to improve the insolvency regime.

Philip O’Sullivan, chief economist at Investec Ireland, said the fall in short-term arrears “reflect the improving economic backdrop and more effective engagement by borrowers and lenders alike”.

Article Source: http://tinyurl.com/kbwqb42

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