Half of the long-term arrears have not paid anything on their mortgage in the past two years

HALF of mortgageholders who are long-term delinquent did not pay anything to their lender in the last year and last year.

ark new central bank figures show that most of these unpaid accounts are more than five years in arrears.

No payments were made on around 14,000 mortgage accounts in 2020 and 2021.

The results suggest that strategic arrears, where people don’t pay when they could pay, could be a factor in some of them not paying their mortgage.

Around 27,000 mortgage accounts, representing 21,500 households, are in long-term arrears.

This is despite the fact that it has been nearly 14 years since the financial crash that left thousands of people struggling to make their repayments.

Around a quarter of the long-term laggards are over 60 years old.

A mortgage account holder is considered long-term arrears if they are more than two years behind on their repayments.

In a research report, the central bank said, “Over half of accounts with long-term mortgage arrears failed to make mortgage repayments in 2020 and 2021.”

That is around 14,000 accounts for which nothing was repaid in the past or in the previous year.

The average outstanding balance of accounts that failed to make repayments in 2021 was €240,410, and the majority of these accounts were more than five years in arrears.

The researchers also found that over the past year, one in five accounts that were in arrears paid less than half of the required repayment amount.

The rest paid more than half on their mortgage last year and the year before.

About 15,000 mortgage account holders were deemed non-compliant by lenders last year, the central bank said.

This is down from 16,000 reportedly not cooperating in 2020.

The continued level of mortgage arrears is despite a spate of sales of distressed mortgages by banks to vulture funds, with those mortgages then being serviced by credit service firms.

Researchers David Duignan, Catharina Lawless, and Aisling Menton examined cases of mortgage arrears at retail banks, as well as retail lending companies like Start Mortgages and lending services companies like Pepper.

They found that mortgages sold to vultures and managed by private lending firms and loan servicers were more likely to arise from long-term arrears.

The behind-the-data research found that solutions can be found to persistent arrears, even in cases where historical repayments are small.

A key factor in finding a solution is meaningful collaboration between borrowers and lenders, the research found.

In the year to June, there was a 12 percent decrease in the total number of delinquent accounts compared to the previous year.

The central bank’s consumer protection director, Colm Kincaid, said the decline in long-term arrears was the result of hard work by borrowers and companies to reduce that number, particularly over the past 12 months.

“It shows that by working together within a defined regulatory framework, there can be solutions that work for both borrowers and businesses, even for borrowers with low affordability and years of arrears.”

He said lessons had been learned from the financial crisis on how to avoid future arrears.

But he said there is more than lenders can do to improve collaboration with borrowers and dig deeper into the range of options available to reach an agreed-upon solution with a borrower.

“We will continue to benchmark lenders’ progress against their plans and goals over the coming months and years,” he said.

Mr Kincaid said for borrowers who are in default or facing arrears, the message remains to get in touch with their lender, even if they are in deep arrears or have defaulted on payments for an extended period of time.

He advised distressed borrowers to turn to organizations like MABS for help.

https://www.independent.ie/business/personal-finance/property-mortgages/half-of-those-in-long-term-arrears-paid-nothing-on-their-mortgage-in-the-last-two-years-42134227.html Half of the long-term arrears have not paid anything on their mortgage in the past two years

Fry Electronics Team

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