Over 123,000 mortgages behind in repayments

Thu, Aug 23, 2012, 01:00

The number of borrowers missing mortgage repayments for 90 days or more increased again in the three months to the end of June, according to the latest quarterly figures for mortgage arrears released by the Central Bank.

The percentage of mortgages in arrears of 90 days or more increased to 10.9 per cent, 83,251 of the 761,533 private residential mortgages in the country, during the three months ended June, compared with 10.2 per cent or 77,630 mortgages at the end of March.

The number of mortgages which were 90 days or more in arrears or which had been restructured to help borrowers make some form of repayment increased to 16.2 per cent or 123,472 mortgages at the end of June from 116,288 mortgages or 15.2 per cent three months earlier.

By value, the amount of mortgage debt in arrears of 90 days or more totalled €16.5 billion or 14.7 per cent of the €112 billion owing on Irish residential mortgages, while the number of mortgages where repayments had been missed for three months or which had been restructured totalled €23 billion or 20.5 per cent of the total Irish mortgage debt.

Figures on the number of mortgages in arrears of less than 90 days were published for the first time by the Central Bank. They showed that the number of mortgage borrowers falling into arrears slowed during the second quarter of the year, as arrears of 90 days or less fell to 45,165 mortgages at the end of June, down from 46,284 mortgages at the end of March.

Just over 22 per cent of mortgages were in some kind of difficulty when these new figures are included with the figures on three-month arrears and restructured mortgages. In terms of value of the debt, 27.2 per cent of mortgages or €30.5 billion of loans had either fallen into arrears or been restructured to help borrowers.

The restructuring of mortgages involves the switching to an interest-only mortgage, a reduction in the payment amount, a temporary deferral of payment, an extension to the term of the mortgage or capitalising arrears amounts and related interest.

The number of properties in possession remained unchanged at 961 in June over the three-month period. The Central Bank said that legal proceedings were issued to enforce on debt or security on a mortgage in 345 cases during the second quarter of the year.

Court proceedings concluded in 193 cases during the three-month period and in 97 of these cases the courts granted orders for possession or sale of the property. During the three months lenders took possession of 146 properties, 44 of which were repossessed on foot of a court order, while the remaining 102 properties were voluntary surrendered or abandoned.

There were 142 properties disposed of during the quarter, leaving lenders in possession of 961 properties at the end of June.

The Central Bank said that it was continuing to monitor the progress of lenders in rolling out “new forbearance and loan modification techniques to provide longer-term and more sustainable solutions for customers in financial difficulty.” Further details on these measures will be published by the Central Bank early next year.

Details of arrears levels on buy-to-let mortgages, which are higher than on owner-occupier residential mortgages, will be published for the first time later this year, the Central Bank said.

The Irish Banking Federation said the high rate of arrears in the latest figures reflect “the difficult economic circumstances in which an increasing number of customers find themselves” but it noted that there has been a slowdown in the rate at which new customers are going into arrears over a number of successive quarters.

“This easing in the pace at which new arrears cases are arising is welcome and we will look to future quarters for confirmation of the sustainability of this trend over time,” said the banking lobby group.

Owen Callan, analyst at Danske Markets, said that there were rising fears that the new personal insolvency legislation would crystallise mortgages arrears into significant losses at the banks and “eat into the expensively created capital buffers” put in place after the stress tests of the banks last year.

However, the lower-than-expected losses on asset disposals by the banks under their deleveraging plans should create “some room” to offset higher-than-expected mortgage losses, he said.

Fianna Fáil finance spokesman Michael McGrath accused the Government and banks of failing to address the crisis in a meaningful way, saying they appeared to be “paralysed” by the scale of the problem.

He said the figures were “dismal”, a “personal crisis” for thousands of families and an economic crisis for the State.

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