Why is there so little fuss made about local authority mortgage arrears?

Brendan Burgess

Brendan Burgess

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Around 28% of Local Authority mortgages were in arrears over 90 days at the end of Sept 2011. This compared to 8% of home loans issued by the banks and sub-prime lenders.

By number that is far fewer, 6,200 local authority loans compared to 60,000 bank mortgages. But it's an extraordinary rate of arrears.

The banks are criticised for reckless lending, but the local authorities were much more reckless, based on these figures.

Brendan
 
Local authority mortgages are given mainly to people that have been refused a mortgage from the banks so by their nature they are going to be more risky.
 
Brendan, the LA's are still continuing to lend at variable rates which is worrying considering the amount of their current mortgage holders in arrears. If the interest rates rise there will be serious problems. I read recently that LA's have approached their tenants with a proposal; that should they wish to purchase their leased homes, they may avail of the variable rate mortgage that is currently available. And wait for the punch line - with a 60% discount. This is all very worrying indeed.
 
Hi Gardener

The current lending rate is 2.75%. It might even be 2.5%.

That is a fantastic rate and while it will rise, it will still be a lot cheaper than those on SVRs with other banks.

I didn't think that the Local Authorities were lending any more. But maybe it's that they are not doing Shared Ownership anymore.

Brendan
 
Good question Brendan.

I agree with the sentiments of the previous poster. I have been aware of the mortgage problem with the local authorities and admit I have seen very little reported about the problem.

Why are they still continuing to lend?

Isn't it amusing that in every recession the council sell their properties at discounted rates to their present tenants i.e. 1988 and hey presto we end up in good economic standing and the councils are left short changed and guess up picks up the deficit.
 
Brendan Burgess said:
I didn't think that the Local Authorities were lending any more. But maybe it's that they are not doing Shared Ownership anymore.

Brendan
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Hi Brendan,

Yes, they are continuing to lend.

I know of people who are currently availing of their special discount. No bank would touch these people with a fifty foot pole. Small deposits and job uncertainty.

Also I have one or two friends who privately purchased their homes in local authority areas and are now looking to sell. Try and sell a property for x amount when your neighbours are purchaseing for 60% less.
 
Since asking this question, I see that it has actually been covered in the Indo today




COUNCILS are being forced to bail out homeowners who cannot afford to repay their mortgages.
One in four loans taken out to buy a local authority house is now in arrears, which is costing city and county councils up to €30m a year.
Click to expand...
 
Report on the radio today says Dublin City Council is owed in excess of 20 million in rent alone.
 
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