New figures due this week from the Financial Regulator are expected to show the number of people falling behind on their mortgage payments is continuing to rise at a rapid rate as the economy continues to struggle and banks charge more for interest.
The regulator is publishing a quarterly update to its mortgage arrears and repossessions data this week and market sources are pencilling in a 10% rise in troubled debts.
"It wouldn't surprise me to see an increase in arrears of at least 10% based on the fact that we haven't seen an economic recovery yet, unemployment hasn't budged and banks are putting up interest rates," said Karl Deeter, operations manager at Irish Mortgage Brokers.
The last update, in May, showed 4% of mortgages – or 32,321 borrowers – were more than 90 days late on their payments. That was an increase of 13% on the previous quarter. Market sources have said they expect more than 35,000 customers to have fallen behind on their mortgage for the period to the end of June.
They pointed out rising interest rates as a prime cause of distress among borrowers. The major lenders, led by Permanent TSB and EBS, have all put up rates at least once since January, putting pressure on already-stretched borrowers.
One broker source said the increases on standard variable rate mortgages were particularly damaging as customers who got those loans during the property bubble tended to be "borderline" while better customers got trackers.
The Free Legal Advice Centre (Flac) has complained of banks chasing unpaid loans by turning up unannounced on customers' doorsteps to discuss payment arrangements. The Financial Regulator has already signalled that it is aware that some lenders are placing undue pressure on customers with more contact than is acceptable and has moved to address the issue in draft proposals for the amendment of the Code of Conduct on Mortgage Arrears, which closes for consultation this week.
Meanwhile, the number of customers who have restructured their loans to more manageable terms could rise by 15% to 35,000, according to the Irish Banking Federation – a sign that banks are taking steps to avoid letting customers slip into arrears.
The latest mortgage market figures by the IBF also show nearly half of new home loans written by its members are for fixed rates – a major change in a market where variable rate mortgages have traditionally dominated.
But brokers have warned that while fixing may guard against future increases, most fixed rates on the market are pricing in anticipated rate rises on variables. Permanent TSB, for instance, put its five-year fixed rate up in January before bumping its standard variable rate by 0.5%.