Home mortgage debt outstanding legacy of Ireland’s financial crisis

DUBLIN, June 3, (RTRS): Jason and Orlaigh O’Connor secured a half-million-euro mortgage 11 years ago to buy the family home from Orlaigh’s ageing parents, even though Jason had to work overtime to meet the repayments and Orlaigh had no regular income.

Now, with barely a dent made in the principal and their account 75,000 euros in arrears, the couple face the prospect of never being able to pay back the loan.

The O’Connors’ case is typical of a situation stymying Irish efforts to deal with some of the most stubborn home mortgage arrears in Europe, after the 2008 crash halved house prices and led to the most expensive bank rescue in the euro zone.

While Ireland’s economy has recovered, clocking the fastest growth in Europe for four straight years, a push to purge the soured loans has stalled — a legacy, critics say, of forced evictions of peasants by absentee landlords in the 19th century that sowed a national aversion to repossession.

Shane O’Sullivan, director of operations at Permanent tsb, which has the highest non-performing loan (NPL) ratio in Ireland at 26 percent, said the bank managed just 80 evictions last year.

“Consumer protection is very strong in Ireland and in the legal system there is a healthy bias in favour of homeowners in the courts,” he told a March news conference.

Data from the Central Bank of Ireland shows Irish lenders have reduced their NPL stock by more than a third to around 14 percent since 2013, when the number was 32 percent, the worst in the euro zone. The regional average is around 4 percent.

The most intractable issue is home loans, many owed by homeowners who refuse to engage with lenders.