MINISTER FOR FINANCE Michael Noonan has confirmed that more than half of the outstanding debt in the sub-prime lending sector is on mortgages in arrears.
In response to a question from TD Michael McGrath, Noonan confirmed that, at the end of September 2013, six ‘retail credit firms’ had a total of 17,807 primary dwelling mortgage accounts and four had 659 buy to let accounts.
These lenders made loans available to people who otherwise would have had difficulty getting mortgages because of a poor credit history. However the loans come with extremely high interest rates and these new figures show many of these borrowers are now struggling to pay them back.
In total, there was €3.345 billion in outstanding debt on primary dwelling accounts and €0.132 billion on the buy to let accounts.
Of that outstanding debt, mortgage accounts amounting to over €1.9 billion were in arrears of over 90 days. That amounts to more than half of the overall outstanding debt.
Noonan commented that the same consumer protection framework applies to there lenders as to other regulated entities.
He said that the Code of Conduct on Mortgage Arrears in particular “sets out requirements for all mortgage lenders, including retail credit firms, dealing with borrowers facing or in mortgage arrears on a mortgage secured on a primary home”.
The minister added that this also provides a “strong consumer protection framework” to ensure borrowers struggling to keep up mortgage repayments are treated in a fair and transparent manner by their lender and that long term resolution is sought by lenders with each customer in difficulty.
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