The Irish Banking Federation (IBF) and its members note from today’s Central Bank statistics on mortgage arrears that, while the total number of mortgages in arrears continues to increase, the rate at which this is happening is decreasing.

This is reflected in a slowdown in the rate at which new customers are going into arrears which has been evident over a number of successive quarters.  This easing in the pace at which new arrears cases are arising is welcome and we will look to future quarters for confirmation of the sustainability of this trend over time.

The Central Bank statistics show that 10.9% of all private residential mortgages are in arrears over 90 days.  While most borrowers continue to meet their mortgage repayments, these statistics reflect the difficult economic circumstances in which an increasing number of customers find themselves.  The financial difficulties facing some customers are also reflected in the numbers in arrears for less than 90 days, a newly-published statistic.  Here again a decreasing trend is notable with the end-June figure down on the corresponding figure at end-March.

IBF members are continuing to assist customers in difficulties with a suite of short to medium-term solutions on a case-by-case basis; and this is reflected in the near 85,000 (84,941) mortgage accounts that have been restructured to date.

At the same time, lenders are increasingly focused on delivering workable, longer-term solutions for customers as appropriate.  Considerable progress is being made by banks under their Mortgage Arrears Resolution Strategy (MARS) in accordance with Central Bank timelines.  Piloting of various new loan modification options is now well underway and these can be expected to provide longer-term and more sustainable solutions for customers in financial difficulty.  Rollout of the first of these various solutions can be expected later this year.

IBF member banks are also recording increased levels of customer engagement as well as a significant improvement in the quality of customer information provided through the Standard Financial Statement (SFS).  Complimented by increased investment by banks in staffing, IT systems and engagement of international mortgage management expertise, this is driving a better level of outcomes for customers.

IBF strongly encourages borrowers who are under pressure with their repayments to communicate with their lenders at the earliest opportunity in order to find a workable arrangement that will assist in the management of their financial difficulties.  To further facilitate this important early engagement, lenders are variously developing comprehensive outreach programmes to communicate and liaise with customers and these will be rolled out over the coming weeks and months.

IBF and its members remain concerned at the absence to date of any official remedy arising from the Justice Dunne judgement which has created an unintended legal impediment to banks' ability to enforce security on residential property in situations where all re-mediation measures have failed and the mortgage is deemed unsustainable.  These concerns have been communicated to the relevant government departments.

IBF Chief Executive, Pat Farrell, stated: "It comes as no surprise that, unfortunately, the overall stock of mortgage arrears continues to grow and indeed is likely to do so for some months yet because of the economic and financial backdrop.  However, the continuing reduction in the pace at which the stock has been growing is very welcome and we must hope that this trend will continue.  Banks are continuing to increase their levels of customer support and to progress the rollout of longer-term solutions for borrowers experiencing financial difficulty in order to maximise the number of sustainable mortgages.  The sector is also working closely with Government in support of the establishment of an independent Information and Advice Service for mortgage customers in arrears."

Article Published: 24/08/2012