MORTGAGE ARREARS

The banks have yet to act on a key recommendation of the government’s expert group on mortgage arrears four months after promising to comply and despite receiving millions in public money to bail them out, according to The Sunday Times.

The expert group proposed a deferred interest scheme last November to give homeowners in trouble up to five years’ grace until their finances improved. Under the scheme, those struggling with their mortgages would have to pay only two-thirds of the interest due, without incurring interest on the deferred payments.

The newspaper reports that none of the five Irish-owned mortgage providers have begun to operate the scheme, although it also says they do plan to do so at some stage.

Some are claiming the scheme will take time to bring in because it means changes to their computer systems to stop them charging interest automatically on deferred payments.

“We are committed to introducing a deferred interest scheme and are working towards its implementation,” AIB told the newspaper.

• Permanent TSB said they would have it up and running by June
• Bank of Ireland wouldn’t say how many customers, if any, were in the scheme
• EBS said it was too early to know how many customers would be interested
• Irish Nationwide said only 10 customers had inquired about it and none had signed up
• Foreign-owned lenders such as Ulster Bank and KBC Homeloans said they would not participate

Irish banks could use next month’s expected ECB rate hike to increase their own variable rates even higher, pushing more hard-pressed homeowners into arrears in the process, The Sunday Business Post reports.

Quoting banking experts, the newspaper says the temptation may be too great for banks seeking to improve their balance sheets. Financial adviser Liam Ferguson said standard variable rates could rise by 0.35%, even though the ECB is expected to increase its own rate by 0.25%.

With banks losing money on tracker mortgages and being unable to increase these rates any higher than the ECB allows, the banks are looking for other ways to raise income.

“If you are stuck in one aspect of your business, you have to see what you can do on other sides to meet the political imperative of getting your act together and getting off the life support line from taxpayers,” said one senior banker.

This, of course, means those who are unlucky enough to find themselves on variable rate mortgages are going to be on the hook once more.

Meanwhile, those fortunate enough to still be eligible for mortgage interest relief can now register for it online.

The Sunday Business Post also reports the service went live last week on the Revenue’s PAYE Anytime website.

“The addition of mortgage interest relief to our online services was available for use from March 3,” the Revenue said. “It is available to all customers who need to register for it.”

Under the revised rules governing the relief, taxpayers must provide detailed information to allow eligibility including PPS numbers for the applicant and their spouse, and details of their mortgage account.