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Mortgage Arrears

Mortgage holders in arrears are older and more likely to have children - report

A survey conducted by MABS indicated that over 36 per cent of mortgage clients were unemployed.

A REPORT BY the Money Advice and Budgeting Service (MABS) has found the clients in mortgage difficulty are primarily households with children, located in urban areas and headed up by people between the ages of 45 and 65.

The report, published yesterday, was prepared by the service for Minister for Social Protection Joan Burton. It found that over a third of all MABS clients with mortgages were living in Dublin, Cork or Galway, indicating an urban majority.

The mortgage survey also found that 67 per cent of clients experiencing difficulty have children. Some 24 per cent of clients in mortgage difficulty are married with children, 19 per cent are single and 16 per cent are single with children.

Age profile

The age profile of the MABs mortgaged client is considerably older than the national MABS avergage with the majority, over 60 per cent, aged between 41 and 65 years old and 36.1 per cent aged between 26 and 40.

The report said that it is “reasonable to assume” that those aged 41 to 65 should be approaching the end of their payment term or have paid in full but statistics released by the Irish Banking Federation in 2012 show a high level of top-up, re-mortgage, and moving between mortgage properties between 2005 and 2009 which may explain why this group are in difficulty.

The survey indicated that over 36 per cent of mortgaged clients were unemployed, more than 17 per cent were out of the labour force and 44.8 per cent were at work.

Multiple debts

An analysis of the monthly budgets for all new MABS clients presenting to the service and having a mortgage debt in 2012 revealed that these households had an average annual income, after payment of essential expenditures and before mortgage and other debt problems of €9,256.

13 per cent of MABS clients in mortgage difficulty are mortaged by subprime lenders with the majority, or 83 per cent, having mortgages with mainstream lenders.

86 per cent of cases reported on in the survey had other debts with 50 per cent having between two and four debts and 5 per cent having 10 debts or more.

On the issue of non-debt issues with which a mortgaged client presented to the service, relationship breakdown, mental health and physical health topped the list.

The report underlines the need for a “holistic, consumer-focused approach” towards consumer debt and makes further recommendations in relation to the resolution of the person debt crisis.

Read: Revenue assures that mortgage write-offs won’t be subject to tax>
Read: Mortgage write-offs ‘could be subject to 33pc tax’>

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