# The true amount of arrears



## itsallwrong

Does anyone have an idea of the real amount of people in trouble with their mortgage?
As I look at, if you have reorganised, reduced, rescheduled and so on - you are in trouble.

OK, maybe not as much as other people but if you cannot meet your full payment every month or have a reduced payment - you are struggling.

People who are in the arrears bucket, those who owe the bank money on the loan - we all know about.
What sort of estimate is there for people who have jiggered around the loan to avoid falling behind - a kind of kick the can up the road approach.
Ultimately they owe the bank also and are in 'technical arrears' but have managed to avoid the 'arrears' bucket because of the reshuffle.

I think the real nasty number of arrears is being hidden with layers of jargon and financial aid packages.

I see our old friends PTSB annouced that they have residential arrears of 13.2% and a whopping 19% for BTL loans.


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## mark12

That's an easy one, using the Central Bank's latest figures, if you add the number of mortgages less than 90 days in arrears, plus those more than 90 days in arrears, plus the ones on interest only, the actual number is about 200000 out of 758000 mortgages.
So roughly 25% of all mortgages, or 1 in 4 is in default territory, and increasing by the day.
I think that this is starting to look like a massive Won't Pay sort of united movement rather that a Can't Pay one.


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## Peter54

mark12 said:


> I think that this is starting to look like a massive Won't Pay sort of united movement rather that a Can't Pay one.



Nothing to do with almost 500,000 unemployed???


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## shigllgetcha

cashier said:


> Shocking figures if you are right. Personally I think that Interest Only Mortgages are a time bomb waiting to explode. How on earth is the capital to these huge mortgages ever going to be repaid?


 
As long as it only temporary its better than someone having to go bankrupt because they or a partner have lost their job, they wont be unemployed for ever and salareis will eventually start rising again



itsallwrong said:


> What sort of estimate is there for people who have jiggered around the loan to avoid falling behind - a kind of kick the can up the road approach.
> Ultimately they owe the bank also and are in 'technical arrears' but have managed to avoid the 'arrears' bucket because of the reshuffle.


 
I also dont agree that all people who reschedule are in "trouble", if we have the exact same income and borrowed the exact same amount of money and you opted for 10 years and I opted for 20, just because you have decided you want more time now doesnt mean you are in trouble and I amn't, it might just mean your circumstances might have changed or your income has decreased or youd preffer to save more money rather than funnell all your money into your mortgage, it doesnt necessarily mean you are any less likely to repay your mortgage in full

You are taking two people who are potentially in the same circumstances and saying one is in trouble and the other isnt

what do you even mean by trouble


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## Bronte

mark12 said:


> That's an easy one, using the Central Bank's latest figures, if you add the number of mortgages less than 90 days in arrears, plus those more than 90 days in arrears, plus the ones on interest only, the actual number is about 200000 out of 758000 mortgages.
> .


 
I don't think that 'restructured' mortgages are included in those figures.  Or people on 'reduced' payment plans.


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## Peter54

No, restructured mortgages nor reduced payment plans are included in the above figures, that's what makes this whole situation thoroughly frightening.


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## itsallwrong

Thanks for that Marc12.

Shig...
'if we have the exact same income ' - facts are most people do not have the same income.
And they will not for the immediate future. 

'you have decided you want more time' - who in their right mind would double the repayment time on a mortgage if they had a choice?
Nobody alters a mortgage on a whim.
You alter the original terms of your mortgage usually for one reason - you are in trouble in one shape or another.
The level of trouble you are in may vary greatly but the bones of it are you are strugglng with the original loan terms.

The original question - the real amount of people in trouble with their mortgage?
Nobody said everyone who reschedules a mortgage is in trouble. But the number that do for a genuine reason is tiny. 
And even that tiny minority is a 'grey' area. Reschedule because of what?
They need money to something else which they don't have to hand.

The vast majority of people jig a mortgage because they are in money trouble or if you are not comfortable with the word 'trouble' - need.

'save more money rather than funnell all your money into your mortgage' - no brainer. 
Your paying a fortune in interest on the mortgage. Deposit account returns are tiny.

My friend came out of the bank the other day puzzled why they called him a 'premium' customer in their conversation with him.
He then explained to me that he pays his mortgage in full, on time and has never altered the original terms.
That is a reflection of how bad things are for the banks with mortgage payments.

What I mean by trouble is: 
A state of distress, affliction, difficulty, or need that a very large amount of people, including myself, are in and will be in for a long time to come.


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## Bronte

itsallwrong said:


> My friend came out of the bank the other day puzzled why they called him a 'premium' customer in their conversation with him.
> He then explained to me that he pays his mortgage in full, on time and has never altered the original terms.
> .


 
Maybe then if one asked what is the figure for these 'premium' customers one could more accurately calculate the figure for those in trouble.


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## oldnick

This will seem a really unfair selfish commentary from a grumpy old man. But I wonder whether Marc12 may have a point about "won't pay rather than can't pay"

Consider:-

1) For those on trackers the interest rate is the lowest ever in history -under 2%. 
Even those on variables are still paying an interest rate that is far less than half of that 25 years ago. At one time I was paying 15% on a 100k loan - probably the same amount of interest that someone is now paying on a 300k loan.

2) Compared to  20+ years ago, today's incomes are three times cf 1987. Somebody repaying capital and interest in the late eighties was paying a bigger percentage of their income on a  100k loan than someone today paying  a variable mortgage rate on a 300k loan - and far more than someone now on a tracker.
It was absolutely the case in the 80s that one paid one's mortgage -and that meant cutting back on everything. 

3) "Cutting back on everything " would seem to be impossible for some of the young couples I know who are  "in difficulty " with their mortages. They still want a car each, a mobile each as well as going out far more than their parents did. Plus taking a holiday abroad ("well, only one this year").

4) Unemployment has increased by over 200.000 -which is about the same number of people in arrears/defaulting. But less than half of these are property owners (irish Times Business Section 10/9/12)-which is still a shocking  figure. (I don't know how long these property owning unemployed are out of work or what they owe. Do they all owe massive amounts?)

5)Not paying one's lender is . if not exactly fashionable, no longer any cause for shame. There's all sorts of bodies on the debtors' side -from govnt agencies to New Beginnings (who even succeed in ensuring well-paid nurses avoid paying relatively small loans.)

Is it possible that many many of those in arrears :-
-are in NE and to some extent don't care if -or even want - the banks to take the keys back. They feel  (with some justice) that the banks are more to blame than they are for overpaying for properties. ("they shouldn't have lent us so much -it's their fault")

- may want to keep their houses, whether in NE or not, but still under-pay their loans because they know that the banks don't want to repossess the house. In fact, pay a bit of interest and you can keep the banks away for years!

- (the grumpy old man bit). A lot of younger people had it very good for over a decade and giving up things to pay their bank debts is ,well, a drag. Why suffer when the damn bankers ain't ?

The above is probably all a bit OTT -and ,of course, there are so many genuine good people in horrible distress.

...but maybe there's a lot of others who could, albeit with difficulty, pay off their loans.

Unfortunately I -and it appears nobody else- has the full facts on this crisis. So the above waffle is just an opinion  -or ,rather, a suspicion.


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## mark12

+1 Oldnick

There are a lot of people who genuinely can't pay, but there's an equal lot who have realised the massive combined powerforce they now are as a group, and to be honest, neither we nor the banks can really make them pay what they owe.

However, although a part of me is tempted to point the finger at this group of people, that is none of my business, it is between the lender and the borrower who decided to stop paying.

It is the government who is to blame, for continuing with the failed old plan of supporting the banks at all costs, while letting the fabric of society desintegrate.
Only today, a German MEP has said ''It does not make sense anymore to pay for the banks, while the wider european economy is desintegrating''.

The plan isn't working, so how about a change of tactics, support the credit unions instead move all deposits to credit unions, insure these deposits, and let the banks and the bondholders at the mercy of the normal rules of capitalism, my taxes are more valuable than a zombie bank

We can well live without banks, but we can't live without people


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## itsallwrong

unfair selfish commentary Oldnick?
On the contrary, those are valid true comments.
Plenty of people in trouble are in deeper than they need to be.
Everyone got very used to a standard of living they are going to find it very hard to give it up.
Cutting things to the bone is a state of financial existence a lot of people have not impossed on themselves.

A lot of people have the opinion that a large value of debts to the domestic borrowers section are going to be written off or greatly reduced.
They are not.
The tax payer is already paying for the banks (unfairly), the little ant on the street is not going to get the same assistance they did.
Some people don't see this fact.
It's been suggested that 20% of people in trouble with their mortgage have put themselves in that position rather than have been put in that position by external forces.
But as always, figures like that are a matter of opinion and who you talk to.


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## Bronte

I don't think you're over the top at all Oldnick. When we got our first mortgage we fixed at around 10% and at that time I remember interest rates hiting 17%. Of the very low income we had most of it went on the mortgage, that was always the priority, no two cars, no car, no mobiles, no phone at all. Remember going to the local phone box often and queueing with everyone else. Had no kitchen to speak of for years, second hand furniture and white goods, threadbear carpets etc. If one did a big grocery shop one walked with the trolly for miles or in my case borrowed a car or took a taxi on the return journey only. I used to walk to work instead of getting the bus to save on the fare. No holidays, unless you count a Ryan hotel weekend all in for a special price that we went on once. Not complaining about any of the above, it's just the way it was, everybody was struggling and trying to make ends meet. Probably what spurred me on to making money out of that first property.

In addition to the items people see as necessities nowadays is the new kitchen, bathroom, driveway, garden. We had a women on here about a year ago about curtains etc being essential, never heard of a black bin bag I guess 

I've noticed that people who come on with massive debts who have investment properties do not give the full picture, you asked someone recently some pertinent questions to which you got no full reply. From things like that I surmise that some people are funding lifestyle over debt. 

Because one cannot tell who is in deep distress I always try to be sympathetic, never know who is on the edge. There are definitely people suffering.

The celtic tiger cubs, some of them, got so used to a certain standard of living, so used to borrowing easily that they now amongst themselves have decided it's the banks fault, the regulators fault, the government's fault.  But never a tiny big their own fault.  Maybe if money comes easy to one, then it's easy to think one can walk away from it, should be entitled to walk away from it.


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## itsallwrong

+1 Bronte

In my line of work - I have put way better items in the skip than my parents ever had in their home.

I'll give you a laugh. 
My young lad asked me for bus fare. I asked what's wrong with your bike?
He replied 'I don't like cycling'. I laughed my butt off and told him to walk instead.

That's what your up against these days folks.


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## oldnick

I note that Brendan B is doing a key post on what arrears actually mean.
There is one line he writes that may sum up the reason for so many arears

*"paying off the capital sum is a form of saving "*

Really ? Whilst technically he is right  -at the end of the day one owns an asset - in practise most people today do not regard spending 500.000 euros to eventually own an asset  worth 250.000 as a form of saving. I fully understand their feelings.

Even worse, not only do these "savers" lose half their savings , but the lender obliges them to stay in the property regardless how unsuitable it may be for a gropwing family  or in case of job relocation. Only slowly are banks perforce becoming slightly more flexible in dealing with people in NE.

It is ,in my opinion, Negative Equity that accounts for so many people being in arrears. Looking over the last few posts in this thread it's clear that many of us believe that many of those in arrears could pay more.  The number should not really be 200.000 mortgage holders.

If property was rising at a slow inflationary level -or even just holding its original price -then I reckon the number in arrears would be half of the present total.

This does not mean i support the crazy high rise in property prices 2000-2006.It's just a possible reason for so many arrears.


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## mark12

*"paying off the capital sum is a form of saving"*

That would be right in 2007, in 2012 for many it's more like, every euro Not payed is a euro saved. 

The 75% that are still paying their mortgage deserve a medal for continuing to do so, given there are so many bad examples around them.


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## oldnick

-a bit like the 60-70%% who've paid property charges whilst their friends boast how they haven't paid or even got reminded about it.Having paid this on several properties (plus NPPR) I feel like an idiot.

However, i know that the govnt and Revenue will reward me in some way ....


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## mark12

Yes Oldnick we have created a society where everyone pays what they like or feel they should pay.
It will take 2 more years for the government to do something about mortgage arrears, by then 50% will be in arrears, i believe that writedowns for those who have been under MARP will become a reality.


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## shigllgetcha

It was stupid from the very beginning to ask people to come forward to pay it, id say the household charge will be dropped soon, theyll just leave anyone that hasnt paid and they will be more ready for whatever they bring in in January

They would have been better spending some time to find every address in the country, send out a bill and get the residents to opt out if they were not liable (if you rented or had a reason for an exemption)


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## Bronte

oldnick said:


> -a bit like the 60-70%% who've paid property charges whilst their friends boast how they haven't paid or even got reminded about it.Having paid this on several properties (plus NPPR) I feel like an idiot.
> 
> However, i know that the govnt and Revenue will reward me in some way ....


 
Your reward is that you can sleep easy.  Me too.  Now I've got to telephone the household charge people again as they've sent me a second reminder even though I duly did as they asked with the 1st reminder.  Why the civil servants are wasting my time and my money on paying their salaries instead of chasing the non payers is beyond me.  But I guess it justifies their jobs.


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## potnoodler

oldnick said:


> -a bit like the 60-70%% who've paid property charges whilst their friends boast how they haven't paid or even got reminded about it.Having paid this on several properties (plus NPPR) I feel like an idiot.
> 
> However, i know that the govnt and Revenue will reward me in some way ....



Your reward for being a lemming will be the government and banks will keep coming back to your well until it's dry
I haven't paid a hc but realize I will and don't morally object to it , I haven paid out of protest because this path will destroy the economy of the country but. It's an easy option for our overpaid government and their advisors


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## Wishes

Agree Potnoddler.

The vast majority of people I know haven't paid and have no intention of paying.  Nobody has contacted them about paying either.  I feel sorry for the people who have paid up because they have helped build a data base that will keep coming back to them for more and more of their hard earned cash.  No offence but they have turned themselves into mere cash cows.


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## oldnick

As someone who has always paid every tax and charge I must agree with the last two posts. 
I'm angry at the fact I've paid - not because I've paid but because I see the govnt still doing absolutely nothing about those who haven't. 

If I pay the 2013 charges whilst those who still haven't paid the 2012 charges  get off then I'm not just a cash-cow but a complete idiot.


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## mark12

The ones who haven't paid will get away with it. There is no way a bankrupt country can bring 500K people to court nor jail them.

The ones who aren't paying their mortgages, will also get away with it. There is no way a bankrupt country can reposess 250K homes nor sell them in falling market.

So we have created a society where everyone pays what they want or feel they should pay.


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## Bronte

People who have not paid will get caught out where they have to sell, where there is probate and where a bank takes back a property to sell.  Government is going to make a lot of money on these.  

It looks like this property tax is going to be taken out of Paye income, and no doubt when they have that up and running they will go back for arrears and penalties.


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## oldnick

The problem with waiting for someone to die or sell is that it could decades before getting the money. which the Troika may not allow. 
I quite prefer the idea of paying when I'm dead -I've got a bit of property ;cash is my problem. 

There are so many more direct actions the govnt could take...
For example, I cannot understand why a utility company provides gas/electricty unless it has a verifiable property charge receipt. Not too hard to set up in this computerised age. No property charge payment = no gas/electricity.

Tell me Bronte - You don't have to reveal where you live (though I'm sort of curious aftr all these years) but how do the authorities make sure you've paid your property tax?


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## Bronte

Well I think here people are just generally tax complaint. If you don't pay a bill, say cable, after two or so weeks they send you the bill again but now it's got an extra 10 Euro on it. If you don't pay your phone or ESB on time it will be cut off, they don't bother with warning letters, so everybody pays those by direct debit, as you could easily forget if you go on holidays. Bureaucracy is horrendous, far worse than Ireland. So I guess people don't want to deal with the hassle as it will only cost you if you don't comply.

Also we can see where the money goes. The services are excellent. They are forever doing up the roads, making the neighbourhoods better. Very envirnomentally friendly. I mentioned a story about how fast they dealt with a water leak, on a bank holiday on here. A sibling in Ireland told me last weekend they cut off the water for the full weekend, lied about putting it back on for a few hours on Saturday, which they didn't. No idea why it was cut off, they said a leak, my sibling thinks they did it on purpose to get overtime. It was still not on at lunchtime Monday. That just wouldn't happen here unless we were informed etc. A bit of snow does cause problems but it's sorted out rapid. As far as I can tell they don't run out of salt, they plan in advance etc. 


There is a black economy but they've put steps in place against it. I won't go fully into it, but let's take the business that are cash in Ireland that are notorious. Here I don't believe restaurants can hide how much they are earning, ditto for home help, if you call a tradesman he will give you a 5 page quotation, you have to sign a contract and he will give you a proper numbered receipt. There are ways around this with for example Polish (etc) but they are wary of being caught, so will not do outside work like painting. My understanding is that they are afraid of being reported. So maybe they have an ethos of reporting. They're is a civic pride. For examply my mother 5 times tried to plant a creeper on her outside wall and had to give up as it was just vandalised each time. People can put out hanging baskets and pot plants directly on the footpath and nobody will steal or vandalise them. Not sure about the inner cities, there are of course bad areas. 

Gavin the gardner did up a few towns in Ireland, putting in trees in towns, but they had to be quickly protected by metal, outside my door last year they planted about 50 trees on the street, no protection and no one will damage them. There is good and bad in every country.

You'll be interested in this Oldnick, this is the place to be a landlord, tenant's are responsible for basically everything, gardening, keeping hedges to level of what it was when you rented, 3 month deposit, no such thing as wear and tear really. You have to paint the place when you leave and it has to be spotless, and I mean spotless, you cannot ring up the landlord to change a lightbulb (I'm sure you've had those tenants), or service the boiler or fix the toilet. Only thing landlord seems liable for is the structure. It makes for a very stable housing environment. Also furnished is very unusual.


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## potnoodler

I've no doubt the state will get it's revenue , their hefty pensions rely on it, but to roll over as a people and accept extra taxation to fund gambling debts of foreign banks is immoral 
No one should have registered , although I accept that landlords were already registered with the 2nd home tax


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## oldnick

Bronte - do you have a spare room for me ?


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## Bronte

Nicholas faraway hills are not always greener as you know well. Look at a place you're half from , we'd all love to retire to Greece but as you pointed out you cannot live there due to poor infrastructure and basics. Ireland is not all bad, it's a very friendly place, very family orientatied all told. The infrastructure has changed so dramatically it's unreckonisable.


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