Banks will be pushed towards solving the ever-lingering problem of mortgage arrears following the announcement of Michael Noonan’s mortgage arrears plan. As part of this plan outlined by the Minister yesterday, lenders must offer sustainable deals to those who find themselves in arrears – otherwise, lenders will be fined.
Six of these banks, among them pillar banks AIB and Bank of Ireland, will be required to offer one in every two of their clients in arrears better deals on their repayments before the year end. However, any lender who does not meet these targets will have to raise extra capital. This extra amount would have to be the equivalent of what a lender would get for the properties it repossesses.
However, it’s not just the banks who have been warned. Any borrowers found not engaging with lenders who offer a better deal on their repayments will have their home repossessed. It is envisaged that offers from lenders will be aimed at both residential and buy-to-let mortgage holders who are at least three months in arrears.