What does being 5 years in arrears actually mean?

Discussion in 'Housing and mortgage arrears - policy issues' started by TrackerThieves, 30 May 2018.

  1. TrackerThieves

    TrackerThieves Frequent Poster

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    Last edited by a moderator: 30 May 2018
    https://www.oireachtas.ie/en/debate...enditure_and_reform_and_taoiseach/2018-05-17/
    Here is a link to the debate.

    I only got to watch this recently. I think there was a huge misunderstanding of what everyone's interpretation of accounts 5 years in arrears. I think they all argued this point with you at different stages during the debate. I was originally of the thinking that Brendan was totally wrong in his interpretation of accounts in arrears of 5 years or more and thought like the senators there would be a lot of accounts in the 10k figure Brendan quoted where even though they were in long term arrears these would include a lot of accounts where people were trying to pay and arrears could still be relatively small. After doing a bit of research and reading though the figures in Central banks Statistical release from 22 March 2018 it appears to me these figures for accounts in long term arrears they must have fairly substantial numbers that have paid little or nothing.

    A few quick calculations from some of the figures in the statistical release show that accounts in
    • arrears up to 90 days - the average balance is 141k with ave arrears of €1,243
    • in arrears 361 to 720 days - the ave balance is €179k with ave arrears of just over 20k
    • in arrears over 720 days - the ave balance is €221k with ave arrears are 77k
    Thought it would be worth discussing further by others who have a better understanding of all this as i felt even thought it was discussed numerous times during the debate it never became clear of what 5 years in arrears actually means and needs to be clarified. Does figures for say 1-2 years in arrears mean it is only accounts that owe between 1-2 years worth of payments as Brendan suggests it means or does it also include accounts that owe a lot less, but arrears
    have been there for a period of 1-2 years. Surely the central bank should provide separate figures for those who pay nothing and those with arrears who are genuinely trying to pay.
     
    Last edited by a moderator: 30 May 2018
  2. RedOnion

    RedOnion Frequent Poster

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    Last edited: 30 May 2018
    The first one. You make a good point though - does everyone understand that's what it means?
     
    Last edited: 30 May 2018
  3. Brendan Burgess

    Brendan Burgess Founder

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    Hi TT

    I thought I made it quite clear when Pearse made the first mis-statement about it.

    There are three ways you can get into 5 years arrears

    1) You have paid nothing at all for the last 5 years.
    2) You have paid half your mortgage payment every month for the last 10 years.
    3) You paid nothing at all for 5 years , some time ago but have been meeting your repayments in full recently.

    That is why "Being 1 years in arrears" means very little. I know people who are two years in arrears but have been meeting their full repayments for a few years, and the lenders refuse to capitalise their arrears.

    I suggested to the Central Bank that they publish actual mortgage payment information.
     
  4. TrackerThieves

    TrackerThieves Frequent Poster

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    Last edited: 8 Jun 2018
    You did make your view clear from the start but as most member's of the committee continued to argue this point with you throughout the debate, i was still unsure by the end and i thought you must have been wrong in your interpretation. As i said I do now believe your view is correct but couldn't seem to find a clear definition anywhere. In plain English if someone is in 2 years of arrears I would have interpreted that to be an account that has been in arrears for a period of 2 years(regardless of actual amount owed) as opposed to actually owing 2 years worth of payments.
     
    Last edited: 8 Jun 2018
  5. Brendan Burgess

    Brendan Burgess Founder

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    Hi TT

    That is very interesting that you got the impression that the TDs and Senators did not believe me? It sort of goes to the point I made that they are not interested in facts, but just making political points. They won't listen to experts in the area - they will just talk at them.

    I have fought the misinterpretation of this statistic for years and I thought I had won. The newspapers used to regularly report "50,000 people pay nothing for 90 days" and I would always contact them to explain it.

    Will you accept the Central Bank's definition? You can find it here:


    https://www.centralbank.ie/docs/def...s-6-2-2-4-1-residential-mortgage.pdf?sfvrsn=6

    The arrears figures denote the value of arrears (payments not received by the contractual
    due date) expressed as equivalent days past due. Partial payments received from borrowers
    will be credited to the oldest arrears amount which will have the effect of reducing the
    balance of arrears. Arrears of over 90 days past due do not necessarily signify that
    borrowers have not made mortgage repayments for the last three months. For example, a
    borrower can be making partial repayments on a monthly basis but may still be in arrears of
    a value equivalent to over 90 days past due. In the same way, arrears of over 180 days past
    due does not necessarily signify that borrowers have not made mortgage repayments for
    the last six months
     
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