Almost one in 10 Irish mortgages is in arrears or has been rescheduled, according to the latest figures from the Central Bank.
Over 40,000 mortgages, or 5.1 per cent, were in arrears for over 90 days at the end of September up from 26,000 a year ago. In 28,000 of these, the arrears were over 180 days.
For the first time, the bank has published an estimate of the number of rescheduled mortgages, at 45,000. Two-thirds of these restructured mortgages are paying at least the full interest, the bank estimates.
Since there is an overlap between mortgages in arrears and rescheduled cases, the bank estimates that a total of 70,000 mortgages are either in arrears or have been rescheduled.
Publication of the data coincides with a proposal from a Government-appointed expert group for banks to defer the interest payable by seriously-indebted borrowers for up to five years.
The Deferred Interest Scheme proposed today by the Mortgage Arrears and Personal Debt group has already been accepted in principle by four of the largest lenders – Bank of Ireland, AIB, Irish Life & Permanent and EBS – but some banks have declined to participate.
Financial Regulator Matthew Elderfield said the proposal would ensure that indebted borrowers wouldn't have to pay interest on their interest payments and could "warehouse" the shortfall in their repayments for a period.
He said the cost for the banks would be marginal but the scheme could save borrowers up to €1,000 over five years as well as buying them time.
Mr Elderfield warned that the arrears problem would get worse before it got better but he also pointed to ESRI forecasts that unemployment, which he said was the main driver of mortgage arrears, would stabilise shortly.
He also emphasised that although arrears figures were still rising, the loss rate they imply for the banks was still below the industry average rate.
The group has recommended against debt forgiveness. Mr Elderfield said the State couldn't afford such a scheme, there were no international precedents for such a step and it could give mortgage-holders a "perverse incentive" to stop paying.
The Central Bank figures show that mortgage lenders have made formal demands in 5,576 cases and court proceedings had been issued in over 3,000 cases.
However, just 98 repossessions were granted during the quarter.