Central Bank expects 'upward trend' in mortgage arrears

Central Bank expects 'upward trend' in mortgage arrears

The Central Bank

The Central Bank has warned that it expects an “upward trend” on mortgage arrears.

The warning came from the bank’s head of consumer protection, who was speaking at an Irish Banking Federation event in Dublin this morning.

Meanwhile, Allied Irish Bank has said that just over 4% of its customers with mortgages are in arrears for more than 90 days.

This compares to just over 8% among all lenders, according to Central Bank figures released in September.

More recent figures from ratings agency Moody’s show that in October arrears rose above 10% on about half the country’s mortgages.

AIB last week agreed a deal with Certus, the independent banking service firm, to help the State-controlled bank manage the growing number of customers who cannot repay mortgages.

The deal, which has yet to be signed, will be the second between a bank and Certus, which manages the run-down of the €30 billion former Bank of Scotland (Ireland) loan book for British group, Lloyds.

AIB has been using contract and agency staff to help with distressed mortgage borrowers.

The head of AIB’s home mortgage business Jim O’Keeffe told Newstalk radio this morning the bank had a lower rate of arrears than many of its competitors.

‘If we look at the September industry figures published at that point, there were 8.1% of customers more than 90 days in arrears; AIB’s figure isn’t running at that level. Our numbers in terms of that comparison are just over 4% at that point.”

AIB, which is 99.8% State owned, has an Irish mortgage book of €26 billion, while its recently acquired subsidiary, the former building society EBS, brings the banking group’s mortgages to €41 billion.

Under the new agreement with Certus, contractors will work with staff in AIB’s home mortgage business, which is run by Mr O’Keeffe.

One in six residential mortgages are in arrears or have been restructured by Irish lenders to help customers meet repayments, according to Central Bank figures.

According to The Irish Times, a report from the Inter-Departmental Working Group on Mortgage Arrears, published last October, ruled out a blanket debt foregiveness programme for struggling homeowners.

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