Mortgage arrears show new rise

Mortgage arrears rose again in the first quarter of the year, the head of financial regulation for the Central Bank said today.

Speaking in Dublin this morning, Matthew Elderfield said the Central Bank's figures, which are due to be published tomorrow, showed a rise in the first three months of the year and described it as possibly the biggest "legacy issue" from the financial crisis.

At the end of 2009, about 3.6 per cent of borrowers were 90 days or more behind on repayments.

However, Mr Elderfield said the issue had to be approached carefully.

"There is no silver bullet solution for mortgage arrears," he said. "We must be careful that any approach doesn't provide financial incentives for the arrears problem to get worse."

He also expressed concern about reports that banks were approaching customers with incentives to switch from tracker mortgages to variable rates when restructuring mortgages that are in arrears.

He said consumer protection would remain a top priority for the Central Bank, and said the Financial Regulator's approach to enforcement would support that.

"The enforcement framework must act as a credible deterrent for poor practice," he said, adding that the regulator would also take on big firms that merited action as its enforcement capabilities grows.

Irish banks would need "significant" support from the Government to reach capital targets, he said.

"One bank is mid way through a successful private capital raising exercise, and international debt markets now have certainty about the scale of the cost to the public finances.