One in nine couldn’t pay their mortgages – 33,000 still can’t

ONE in nine mortgageholders were in such financial difficulty during the lockdown that they could not make their monthly repayments, the Central Bank has revealed.

More than 67,000 Covid-19 homeowners took a ‘payment break’ in May and by last month around 33,000 people were still struggling so much they could not afford to go back to repaying the loan.

The total in repayments is worth €10billion, making the average debt of those on a payment break €150,000.

David Hall, head of the Irish Mortgage Holders Organisation, which represents struggling homeowners, said: ‘It’s a lot and the risk is how many will come back to work? That’s the key question.

‘We just don’t know. All those industries that were dramatically affected during Covid came to an overnight halt, they all got payment breaks.

‘The question is: will those businesses return? Will the jobs be full-time or part-time? The Central Bank and everyone else is asking how many

Plea to banks: TD Ged Nash will come back to work?’ The Covid-19 payment breaks ‘provided valuable cash-flow relief to households and businesses across Ireland in the wake of the pandemic’, a Central Bank study stated.

Around one in five of those who took a break had taken them previously, it added.

Unsurprisingly, most of the breaks – 53% – were by people who had bought their homes at the height of the boom between 2004 and 2008. The group least likely to take a break had bought in 2010, when property prices had dived after the economy crashed.

Loans issued since the introduction of the mortgage measures in 2015 were also less likely than the average mortgage to seek relief, the Central Bank report stated.

‘In addition, it finds that those who borrowed higher multiples of their annual income – loan-to-income ratio – were more likely to have a payment break,’ the banking regulator added.

Companies that took most repayment breaks had a high share of employees either on wage subsidies or who were temporarily laid off.

The highest payment break

‘Give workers a break’

rates were in the accommodation and food, arts, entertainment and recreation, and other services sectors.

Some 47% of accommodation and food balances had a payment break, rising to 59% when looking at SME balances in isolation. In addition, 45% of arts, entertainment and recreation SME balances had a payment break.

Labour finance spokesman Ged Nash has called for banks to continue payment breaks for workers and to waive interest and charges as an act of solidarity to support workers and their families through the crisis. The Louth TD said: ‘This report from the Central Bank clearly shows that, as people have returned to work, the level of payment breaks has significantly dropped – with almost half of people returning to full payments by the end of August.

‘Yet some sectors – such as accommodation, entertainment and recreational sectors – have not been so fortunate. They are now facing a prolonged period of uncertainty, not helped by a continued lack of clarity and support from Government.

‘Bank payment breaks must be extended for workers in these sectors as a matter or priority to help support them through the crisis and prevent families losing their home through no fault of their own.

‘I am therefore calling on the banks – the same banks bailed out by the Irish public during the last crisis and in which the State still holds a significant stake – to give workers a break and drop the payment break penalty charges.’

The charges could amount to an additional €4,300 payment on an average €300,000 mortgage with 30 years to go – a charge which will cripple ordinary working families recovering from the Covid-19 hit, Mr Nash said.