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Dublin: 7°C Wednesday 25 November 2020

'Appalling' state of sub-prime mortgages in firing line

One in four home repossessions since 2012 relates to sub-prime properties, new figures show

Image: Sam Boal/Photocall Ireland

OVER HALF OF ‘sub-prime’ mortgages are in serious repayment difficulty, with nearly €2 billion in arrears out of a total of €3.4 billion owed on homes and buy-to-let properties in this category.

The figures were released to Fianna Fail spokesman Michael McGrath in reply to a parliamentary question, which also revealed that 4,554 out of 17,789 sub-prime home loans had been restructured.

For buy to let properties, 88 out of 739 are restructured.

The mortgage restructuring targets imposed on the banks as part of an effort to resolve problem home loans do not apply to the sub-prime properties, Finance Minister Michael Noonan confirmed.

McGrath said that the exclusion of sub-prime mortgages from the Mortgage Arrears Resolution Target process is “inexplicable”

Sub-prime mortgages are among those most in need of permanent restructuring and the Minister should move to apply rigorous restructuring targets on sub-prime lenders. In particular, the Minister should put the spotlight on interest rates being charged which are often exorbitant.

Sub-prime loans are mortgages issued by ‘retail credit firms’ such as Start Mortgages, Springboard Mortgages and Nua Mortgages.

Some mainstream institutions such as AIB, EBS and Permanent TSB also operate retail credit firms.

Pointing to figures that show one in every four home repossessions since the beginning of 2012 relates to sub-prime loans.

“The simple truth is that the government has shown scant regard for the 18,000 sub-prime mortgage holders – many of whom are now in real danger of losing their family home.”

It is well past time that the government and Central Bank extend the Mart programme to sub-prime lenders in order to save as many of these family homes as possible.

Read: €1.9 billion in outstanding debt of sub-prime mortgages>

Read: The verdict on Bank of Ireland’s €250 million mortgage book sale>

About the author:

Jack Horgan-Jones

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