All efforts must now be made to stop people falling into longer-term arrears on their repayments
President of the European Central Bank Christine Lagarde during a press conference following the meeting of the governing council of the ECB in Frankfurt on Thursday. Photograph: Kirill Kudryavtsev/AFPThe sharp rise in interest rates since the summer of 2022 has hit many households hard. The decision by the European Central Bank to announce another increase on Thursday will not have helped. The ECB’s move, at a time when the euro zone economy is weakening fast, is questionable.
Many of those on tracker mortgages, who are hit most directly by increases, are well into their mortgage term. This does not mean that coping with higher repayments is welcome, or even easy, but most are unlikely to slip into arrears. However some will. Central Bank research has shown that there is a group of tracker mortgage holders with higher outstanding balances who are significantly exposed. And also a group whose loans were sold from Irish banks to international funds and are now managed on their behalf by specialist companies. In some cases these borrowers are already facing rates of 8 per cent plus.
All efforts must now be made to stop people falling into longer-term arrears. Central Bank figures for the first quarter of the year showed an uptick in shorter-term arrears and this data now bears close watching. Arrears must now be dealt with under a special Code of Conduct on Mortgage Arrears via a prescribed process.
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