Irish mortgage arrears fall again despite cost-of-living pressures

The number of owner-occupier mortgages in arrears continues to fall despite the surge in living costs and rising interest rates.

Central Bank of Ireland figures show the number of principal dwelling house (PDH) accounts behind in their payments fell by 342 in the third quarter of 2022, following a decline of 2,071 accounts in the previous quarter.

At the end of September, some 4.3 per cent of all PDH mortgage accounts were in arrears of at least 90 days, representing 30,809 mortgage accounts. The total number of accounts in arrears was 45,746.

“This continues the incremental downward trend observed over the last number of years and is the lowest number of accounts in arrears over 90 days since March 2010,” the regulator said.

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The figures, however, show the number of cases of arrears of less than 90 days rose by 494 to 14,937, perhaps reflecting tougher financial conditions generally.

The Central Bank has previously warned that up to a third of lower-income Irish mortgage holders could face financial distress trying to meet loan repayments if recent levels of inflation were maintained.

The outstanding balance on PDH mortgage accounts in arrears of more than 90 days equated to €6 billion, equivalent to 6 per cent of the total outstanding balance on all such mortgage accounts.

Accounts in long-term mortgage arrears, behind for more than a year, accounted for 52 per cent of all accounts in arrears but they also declined by 998 over the quarter.

About 16 per cent of Irish home loans were in the hands of nonbank entities as of the end of the reporting period, including nonbank lenders and international funds that acquired billions of euros of soured loans in the wake of the banking crash.

The figures showed that nearly three quarters (74 per cent) of PDH mortgages in arrears for over a year were held by nonbank entities.

A total stock of 61,278 PDH mortgage accounts were categorised as restructured as of the end of September, representing 9 per cent of total PDH mortgage accounts outstanding with arrears capitalisation and term extensions accounting for most of the deals.

The majority of accounts in mortgage arrears are not currently subject to legal proceedings, the Central Bank said.

With regards to PDH accounts in arrears, some 28,554 accounts in arrears (62 per cent) had no formal demand issued as of the end of September.

A further 6,014 accounts (13 per cent) were at the formal demand issued stage, but legal proceedings had not yet commenced. The number of properties in possession by the reporting institutions was 545, down from 580 at the end of the previous quarter.