Keeping the lines of communication open is the key to managing mortgage arrears, the Irish Banking Federation (IBF) said today.
Commenting on the figures released by the Central Bank which showed a dramatic worsening of the mortgage arrears situation in the last year, the IBF said early and constructive engagement between borrowers and their lenders was vital.
This was reflected, it said, in the Central Bank's confirmation that tens of thousands of mortgages have been restructured for borrowers by their lenders.
It said its members were assisting borrowers "in every reasonable way possible."
Frank Conway, financial advisor and director of the moneycoach.ie website, said the figures were of major concern.
"The latest statistics are a major concern as they only factor in arrears through to the end of December 2010," he said. He added they did "not factor in the most recent interest rate increases announced by several banks,"
The chief executive of the Irish Brokers Association Ciaran Phelan said that with 10 per cent of homeowners "now unable to meet their full mortgage repayments and the level of arrears continuing to spiral" there is a growing need for the next government to devise "a comprehensive solution as the current policy of forbearance"
He said that while the policy was welcome it was "simply deferring and exacerbating the problem. Our brokers need to be able to offer their clients clear financial advice, but with uncertainty over the changes that need to be made to our debt laws and inconsistency as to how lenders will respond to proposals from homeowners, it's difficult to advise. We believe that the new Government will rectify this situation as this financial time-bomb will almost certainly implode within the new Government's term in office."
Paul Joyce of the Free Legal Advice Centres (Flac) said the figures showed "not only the need for diligent adherence by lenders to the revised Code of Conduct on Mortgage Arrears but also the need to develop and
implement stronger measures to actually address the mortgage arrears problem and indebtedness in Ireland generally."
The revised Code of Conduct on Mortgage Arrears, which came into effect at the beginning of the year, enhances protection afforded to people in arrears or pre-arrears.