Almost 100,000 mortgages adjusted since economic crash

Central Bank study shows number of people in mortgage difficulty higher than thought

Research on bad loans and the State‘s mortgage market by Fergal McCann of the regulator’s Financial Stability Division examined five banks.

The scale of mortgage adjustments in the Irish market since the financial crash has been larger than previously measured with almost 100,000 loans altered, new research from the Central Bank shows.

Research on bad loans and the State‘s mortgage market by Fergal McCann of the regulator’s Financial Stability Division examined five banks and found that close to 100,000 adjustments were issued between 2009 and 2016.

Furthermore, there was at least one temporary arrangement between 2009 and 2016, with slightly over 100,000 having been issued a long-term sustainable arrangement.

Nine out of ten loans that defaulted between 2009 and 2016 and had exited default by the end of 2016 did so following an adjustment to their loan.


There was a rapid switch from adjustments of a short-term nature to those of a more long-term, sustainable nature after 2013.

Mr McCann said this was “important” considering that permanent adjustments are associated with higher repayment probabilities than adjustments of a temporary nature.

Mr McCann also found the number of people entering mortgage arrears during the fourth quarter of last year was at its lowest level since data collection began in 2010.

Furthermore, those entering arrears in late 2016 were predominantly borrowers with a history of getting into trouble with loans or mortgages.

On tracker mortgages, more than 260,000 are vulnerable to potential interest rate rises from the European Central Bank. For the majority, monthly mortgage payments would increase by between €100 and €200 if ECB policy rates were to rise by 200 basis points.

Mr McCann also highlighted the “extremely sharp and systemically-important” increase in mortgage arrears following the financial crisis.

He said the Irish mortgage market has been “notable” in an international context for the speed with which non-performing ratios have been reducing since 2014.

The research show that 61 per cent of borrowers in deep-arrears had engaged with their lender by the end of 2016. This figure rose to more than 70 per cent for those with arrears of less than 720 days.

Unlike engaged borrowers with lower arrears balances, those in deep arrears in the majority received temporary adjustments in the past that have since elapsed. Engaged borrowers are also likely to have larger loans than non-engaged borrowers.

AIB's Shares in AIB surged to their highest level since their summer flotation earlier this week after the bank revealed in a trading statement that its level of bad loans fell by €500 million to €7.3 million during the quarter. Its year-to-date decline is 20 per cent.

Colin Gleeson

Colin Gleeson

Colin Gleeson is an Irish Times reporter