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Patrick Honohan, Governor of the Central Bank of Ireland. (AP Photo / Peter Morrison)

Patrick Honohan: 'Household financial distress is at unprecedented levels'

The Governor of the Central Bank said that banks will have to act more “ pro-actively” and “liberally” in respect of those who cannot realistically pay their mortgages.

THE GOVERNOR OF the Central Bank of Ireland Patrick Honohan said that “household financial distress is at unprecedented levels in Ireland”.

Speaking at the Central Bank’s conference on distressed property markets, he said it can be seen from “the extraordinary rates of  arrears on the servicing even of mortgages secured on owner-occupied homes”.

It has been 16 months since the last economic research conference organised by the Financial Stability Division of the Central Bank on the problem of mortgage indebtedness and mortgage arrears. Since then, Mr Honohan said they have been “ramping up” efforts with the banks in recognition of the fact that they “seemed to be behind the curve in addressing the problem of mortgage arrears on a sustainable basis”.

He added “most borrowers continue to service their loans” and that long-term debt modification would be kept for cases of over-indebtedness involving or bordering on insolvency. To date, the banks have dealt with the emerging situation largely by means of two devices: capitalisation of arrears and a temporary move to an interest-only payment schedule.

On the issue of repossessions, he believes that it might be inevitable for many investment properties but should be avoided for the majority of owner occupier cases where the borrowers are doing their best to repay. “A debt modification that enables them to stay in their home will often be the best solution all around,” he added.

He said that banks will have to act more “ pro-actively” and “liberally” in respect of those who cannot realistically pay, however, the Governor said there would be “consequences for an uncooperative borrower refusing to make a reasonable effort”.

When complications arise from multiple indebtedness, he said “deals with other creditors,” like Credit Unions, will play an essential part of any effective and sustainable mortgage modification.

Read: Central Bank Governor says ‘deal’ will not unravel >

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56 Comments
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    Mute sean o reilly
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    Mar 21st 2014, 8:05 AM

    This headline should read ” insurance company reaping the benefits of gender directive”.

    186
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    Mute talkingsense
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    Mar 21st 2014, 9:43 AM

    My insurance hasn’t gone down whatsoever! Also under this directive can I get a refund on the €4200 I paid for my first Years insurance back in the day

    35
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    Mute Roy Dowling
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    Mar 21st 2014, 7:51 AM

    It’s all about equality.

    103
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    Mute Hound of Cooley
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    Mar 21st 2014, 10:32 AM

    Equality not so great now ladies.

    35
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    Mute TheLoneHurler
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    Mar 21st 2014, 12:02 PM

    Can men reclaim the horrific car insurance payments they made in their late teens and early twenties whilst women drove off paying less than half those rates? It was pure discrimination.

    32
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    Mute Farbin
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    Mar 21st 2014, 8:00 AM

    So is the article complaining that there is equality now?

    101
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    Mute Amphroaí Ó hAipilbí
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    Mar 21st 2014, 8:01 AM

    It seems so.

    Michelle must have enjoyed all those complimentary comments yesterday, because she’s on fire this morning.

    52
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    Mute Fiona Ryan
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    Mar 21st 2014, 9:06 AM

    I thought it was more that insurance companies are taking advantage of the directive?

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    Mute Mike Clinton
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    Mar 21st 2014, 7:57 AM

    It’s about time.

    51
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    Mute Amphroaí Ó hAipilbí
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    Mar 21st 2014, 8:00 AM

    Isn’t equality nice!

    I suppose the usual bleaters will complain now because things are not equal enough for them…

    … and perhaps post such thoughts up in the form of articles.

    47
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    Mute Ailbhe O'Nolan
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    Mar 21st 2014, 8:13 AM

    There are positives and negatives of equality. You can’t expect to reap the gains and avoid the loses!

    Cue Sinéad giving out!

    46
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    Mute Andrew Potts
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    Mar 21st 2014, 8:13 AM

    Can’t wait for the age directive so older motorists have to pay the same as younger motorists

    46
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    Mute Shane Barry
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    Mar 21st 2014, 8:27 AM

    Mine still costs €1200 a year, which I can’t afford. Even my friends who now have full licences are paying at least €800 a year.

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    Mute Joseph Dempsey
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    Mar 21st 2014, 8:17 AM

    Complete Bo#$&x. Not a claim ever my renewal quote doubled this week, I don’t recall having a sex change. Even scouring around general quotes more than last years premium.

    46
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    Mute Brenda Collins
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    Mar 21st 2014, 8:40 AM

    Mine went up significantly after the gender directive, but I noticed that my older sister, who doesn’t even have a full licence, still paid less than me. So age must be a factor too. My premium has now come down again thankfully, but all savings will be lost by the time I have to renew my health insurance!

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    Mute Jane Sherlock
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    Mar 21st 2014, 10:34 AM

    Go online to renew health insurance, big money can be saved that way

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    Mute Hound of Cooley
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    Mar 21st 2014, 10:40 AM

    Mine went down in fact all i pay is €350 fully comp. Its great really considering it was 800 two years ago… roll on the equality movement… next i hope that ALL my fellow citizens who drive around in 2014 brand new cars and hi-aces have to pay actual income tax and have benefits stopped until they can prove income… now there’s a novel idea.

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    Mute Paul Roche
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    Mar 21st 2014, 2:05 PM

    I’m amused you are envious of those who drive HiAces…

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    Mute Neal Ireland Hello.
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    Mar 21st 2014, 5:17 PM

    There should be a tax on excess cynicism and assuming the worst about your fellow citizens.

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    Mute Brendan Cooney
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    Mar 21st 2014, 7:56 AM

    Good

    41
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    Mute Larry L'Oiseau
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    Mar 21st 2014, 8:10 AM

    They obviously didn’t talk to Aviva if the research is indicating an average price drop for men.

    39
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    Mute Damo
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    Mar 21st 2014, 10:33 AM

    My claim trippled this week. When I rang them I was told that all insurance was going up all across the board due to more claims. I had to shop around, I got a cheaper quote only 100euro over my old quote. Insurance companies are like criminals. Charge what they like with no fear.

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    Mute Deasun Mac An Choiligh
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    Mar 21st 2014, 8:27 AM

    Seeing as this a gender directive should LBGTI persons incur more costs , on account of their sexual mis-adventures and the dangers therin …, or is gender not a social construct when it comes to health insurance ?

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    Mute Martin Bishop
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    Mar 21st 2014, 8:55 AM

    Sorry?
    Are you suggesting a gay person sleeps around more then a heterosexual?

    Go out on any Saturday night and you’ll see a heterosexual person hooks up sleeps around the same as somebody that is gay, their all human’s after all with the same urges and desires.

    34
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    Mute Norman Hunter
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    Mar 21st 2014, 9:07 AM

    Gender is not the same as sexuality.ffs.

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    Mute Deasun Mac An Choiligh
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    Mar 21st 2014, 9:14 AM

    http://www.belfasttelegraph.co.uk/service/advertorials/sexually-transmitted-infections-in-men-who-have-sex-with-men-msm-continue-to-soar-30086359.html , I’m merely stating a fact and proposed that perhaps a person who “identifies” as gay should bear the financial brunt if their lifestyle choice endangers their health

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    Mute Fiona Ryan
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    Mar 21st 2014, 9:20 AM

    Don’t feed the troll/Neanderthal lads

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    Mute Ailbhe O'Nolan
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    Mar 21st 2014, 10:16 AM

    Gay women are at a lower risk. Should they pay less?
    As a gay women, I don’t think so.

    16
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    Mute Daisy Chainsaw
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    Mar 21st 2014, 10:50 AM

    They say gender doesn’t matter, yet they all ask if you’re male or female with no choice to ignore answering so I’m sceptical regarding any real change.
    My Broker is charging a fee of €45 for renewal through them. I went online myself and got a cheaper quote than they got for me. A follow up call from the insurer got me another 5% off. Needless to say I’m taking care of business myself this year.

    19
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    Mute cosmological
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    Mar 21st 2014, 7:55 AM

    ‘Gender directive’ – hate these euphemisms.

    17
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    Mute Emily Elephant
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    Mar 21st 2014, 8:13 AM

    It’s not a euphemism. There really is a European Directive and it really does deal with gender. Council Directive 2004/113/EC if you’re interested.

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    Mute Denise Cronin
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    Mar 21st 2014, 10:26 AM

    So equal pay will be next on the agenda. Men get paid more than women in the same job so I suppose when they balance it as they have done here, the extra pay we will get will offset the hike in insurance. Of course by the same token the drop in wages for men will be offset by the drop in insurance

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    Mute Etienne de Montfort
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    Mar 21st 2014, 5:16 PM

    No they don’t

    5
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    Mute Eon Barry
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    Mar 21st 2014, 10:20 AM

    Equality, its all fun and games untill you see what it really means :)

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    Mute Deasun Mac An Choiligh
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    Mar 21st 2014, 1:55 PM

    Smoking , drinking heavily , pharmacuetical drug dependence , illegal drug use , over or under eating & depression would be factored into a quote for health cover , why not the practice of unsafe sex?

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    Mute Ailbhe O'Nolan
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    Mar 21st 2014, 3:09 PM

    It depends on how the companies define unsafe sex? It also would depend on how they would regulate it and prove it. If people don’t admit to it, and are healthy, it can’t be proven. Unlike smoking, drug use, dangerous work etc.

    1
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