Recent SVR Hikes and Arrears - What are the banks planning?

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Inspired by recent hikes by both AIB and BoI in particular, I was wondering what people's views are on the banks plans to deal with what can surely only now be mounting arrears. I would particularly suspect that BTL arrears, already high, are bound to increase quite substantially given what have been very sudden and relatively high rate increases.

I can only assume that AIB/BoI have some sort of plan to tackle this, but seeing as they have shown themselves to be very reluctant to repossess, I assume they are gearing up to appoint rent receivers more aggressively to ensure any cash flow from the properties are directed fully to them. I may be giving them too much credit though.

Any views? What shape is the response to mounting arrears going to take?

It's a very interesting point.

The big driver of arrears is unemployment. If someone loses their job, they generally can't pay very much towards their mortgage. It doesn't matter that much if the interest rate is 2% or 5%. They can't pay their way.

AIB has pushed up the SVR from a ridiculously low 3% up to 4%. It is still the cheapest lender. It will increase the level of arrears, but not hugely. It may cause more rescheduling.

The level of arrears on tracker mortgages is lower than on SVR mortgages, but not by as much as you would expect. I can't remember the source for this, but I remember being very surprised surprised by it.

Add to this the fact they will be generating additional profit by adding 1% to the mortgage rate from everyone with a SVR mortgage. They can use some of this to fund write offs of debt for unsustainable mortgages.

Brendan

With this increase and a Budget just around the corner they might find more people going into arrears than they bargained for. People can't keep being squeezed until they have nothing.
I myself just got to the point two months ago where we couldn't keep going.
After talking with a financial adviser we were told just concentrate on the primary mortgage and let the buy to let one go. Which we've done.

So those on variable mortgages will have to pay for their own mortgages, the neighbour's tracker mortgage, the budget deficit, plus their lender's foreign debts, will they be able to carry the world on their shoulders?

mark71 said:

After talking with a financial adviser we were told just concentrate on the primary mortgage and let the buy to let one go. Which we've done.

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Interesting advice!

Are you getting in rent on the rental property? Are you paying it off your mortgage on your home?

Brendan Burgess said:

Interesting advice!

Are you getting in rent on the rental property? Are you paying it off your mortgage on your home?

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No, no rent on the rental property.

I work full time but overtime dried up and my wife lost her job in 2009. We can manage the full amount on the home mortgage but used up all our saving's trying to keep the buy to let going.
The bank got us to fill in the Financial Statement forms and could see the mortgage wasn't sustainable. They then offered us the standard options, voluntary surrender, voluntary sale (they'll review this after 6 months) or if we ignore those two options seek possession through the courts.
All the while interest will be incurring on the loan. And we'll be accountable for any shortfall from the sale.

This seems to be the standard letter going out with just your name and the amount owed changed from letter to letter.

We were advised just stop paying it. We've two young children and to enjoy them growing up and not to be driving ourselves insane with worry over a debt we'll never be able to pay.

In relation to the banks and planning, I don't think they, the governemnt, the IMF, Europe or anyone else have a clue what to do. Since the crisis hit, I've never heard such c---p from supposed experts.