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Rising interest rates leading Ireland into a ‘massive crisis’ of home repossessions

The Irish Mortgage Holders Organisation has cautioned that Ireland is “sleepwalking again into a massive crisis” of home repossessions.

The organisation’s founder David Hall appeared on Newstalk Breakfast on Monday to warn about what he described as an impending “tsunami” of repossessions amid surging inflation. Mr Hall said that further rises could be on the horizon, saying that he believed many people in Ireland will lose their homes.

It comes as the European Central Bank raised mortgage interest rates across the eurozone from 0.75 per cent to 1.25 per cent. 

“We still have 23,000 households in long-term mortgage arrears,” he told the programme, adding that “73,000 people are at dire risk” of losing their homes. 

“With 90% of all arrears attributed just to those 23,000 people and that’s three per household. That’s 70,000 people at direct risk”.

In the wake of the Celtic Tiger, thousands of Irish homeowners who couldn’t pay their mortgages faced eviction from their homes. While a recession as deep as the last one is ‘considered unlikely,’ Mr Hall said that thousands of people here have been unable to pay their mortgages for a significant time already, adding that “the tsunami should have come”.

“The Central Bank asked banks and vulture funds two years ago, ‘how many people, of those that you engage with, your customers whose data you’ve seen, do you believe are going to lose their homes?’ 

“They replied by saying 16,000. 

“They went a step further and they said five-sixths of those would be by court order repossession and a sixth would be by voluntary surrender. 

“That’s their numbers. We’re sleepwalking again into a massive crisis. 

“And anyone sitting at home today thinking they’re getting a free house, I think they’ve another thing coming. 

“And those commentators who think that they’re going to get a free house have done them a great injustice,” he added.

“There’s no doubt in my mind what’s coming,” he said in regard to a further rise in interest rates. He said that “radical solutions” will be required to keep people in their homes.

Asked what his advice would be, he urged anyone at risk of losing their homes to engage with authorities, stating: 

“Engage through the Irish Mortgage Holders Organisation, do not listen to the waffle that you’re going to get a free house.

“No tsunami doesn’t mean a free house. No tsunami means it’s coming soon”.

His comments come as Finance Ireland, Ireland’s largest non-bank lender announced today that it is increasing its lending rates by up to 2 per cent. Finance Ireland, which has 5 per cent of the Irish market, equating to about 36,000 mortgages, said it will be increasing variable and fixed rates for home loans between 1.5 per cent and 2 per cent, depending on loan-to-value. 

The changes will come into effect straight away for new borrowers, while mortgage applications that have been approved and are drawn down before close of business this Friday will remain at the existing rates. 

Following the rate increase, a 20-year fixed rate mortgage will be priced from 4.6 per cent to 5 per cent depending on loan-to-value percentage band.

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