Central Bank figures show slowing arrears

The number of people falling behind on their mortgages seems to be slowing, according to the Central Bank.

The number of mortgages that have not been paid for more than three months rose to 9,426, or 11.9 per cent, of all home mortgages, said the bank. The comparable figure in for last September was 11.5 per cent. However the increase in the last three months was the smallest seen in more than three years.

The data also shows home loans that were less than 90 days in arrears fell by more than 1 per cent, giving rise to fresh optimism that the situation may be easing.

The number of people who are over two years behind on their mortgages is 23,500, according to the bank The number of restructured loans fell to 79,852 cases from 81,634. Those whose terms have been eased permanently rose 13 per cent to 23,432 during the quarter, the bank said.

“While, at first glance, the overall stock of restructured mortgages has fallen, we note that this masks a double-digit increase in the number of permanent restructures, which are a more sustainable way of addressing troubled loans,” said Philip O’Sullivan, chief economist at NCB Stockbrokers in Dublin.

More permanent solutions

Banks are turning to more permanent solutions, including term extensions, permanent interest-rate reductions and split mortgages, where some of the loan is hived off until a borrower’s circumstances improve. About 30 per cent of modified loans were now permanently restructured, the Central Bank said.

The most popular form of forbearance is allowing borrowers to only pay interest, at 37 per cent of restructured loans, it said. Extending the loan terms accounts for 17 per cent and split mortgages 0.01 per cent at the end of December.

Buy-to-let arrears rose to 18.9 per cent of such loans from 17.9 per cent at the end of September. The number of restructured investment loans fell to 21,800 to 22,182 on the quarter. The number of buy-to-let properties in banks’ possession rose to 454 at the end of December, from 408 at the beginning of the quarter. Lenders repossessed 88 such units in the quarter, while selling 42.

The Irish Banking Federation welcomed the evidence of a continued slowdown in the pace of arrears, but it noted the continued rise in the overall level of arrears.

“This should come as no surprise given the difficult economic conditions faced by a sizeable number of customers,” the federation said.

“Nor is it unexpected that the number of accounts in long-term arrears over 720 days has increased, as increases in new mortgage arrears in previous periods will be followed some time later by a deterioration in the level of longer-term arrears.”

Mortgage accounts

There are 792,096 private residential mortgage accounts in Ireland with a value of €110.8 billion, with 150,344 residential mortgage accounts for buy-to-let properties worth €31.1 billion.

However, repossessions of properties in arrears were still “unsustainably low”, Davy analysts said. “The most effective measures in dealing with mortgages in arrears, repossession and debt write-downs, remain negligible,” Conal Mac Coille and David McNamara wrote.

Legal proceedings were issued on 238 mortgages in the last quarter of the year.