It could take three years to get on top of mortgage arrears

Real progress on mortgage arrears won’t be seen until 2016

Arrears on mortgages remain a major stumbling block if the property market is to return to a state where sustainable lending takes place. At present, there are approximately 169,000 mortgage holders who are struggling to make full repayments. Over 77,000 of these holders have arrears of 3 months or more. Although one in five households is in trouble, the amount of people with debt issues has not yet reached its zenith.

According to analysts in Goodbody Stockbrokers, the arrears figure will reach its peak in the middle of next year. However, the number of troubled mortgages will only start to modestly recede during 2014 and 2015, and it won’t be until 2016 that marked progress will be made. It should be noted that the banks have allocated a €6.4 billion fund solely for debt restructuring.

Despite such a large sum of money put aside for the very issue, only a mere fraction of it has been utilized for the purposes of mortgage write offs. Since 2010, just €251 million had been spent by banks to lower monthly repayments on distressed home loans. But, it seems some of the leading institutions have finally realised the severity of this issue by forming a specialised arrears teams.

AIB and Ulster Bank announced that it will take this approach to directly contact its distressed mortgage base to offer working solutions to combat against unsustainable debt.