More mortgages in arrears - Moody's

THE NUMBER of Irish people who have fallen behind on their mortgage repayments may have come close to doubling in the 12 months to last March.

Ratings agency Moody’s released figures yesterday showing that the rate of delinquency in mortgage repayments – with repayments more than 90 days in arrears – rose to 3.8 per cent in March from 2.1 per cent during the same month in 2009.

Its arrears figures are based on its assessment of €42 billion of mortgages covered by asset-backed bonds issued by home lenders in the Irish market.

Analyst Georgij Ludmirskij said some of the bonds within the group began to show losses for the first time as a result of arrears.

The total mortgage stock is €146 billion, so Moody’s calculations refer to a little under one-third of the market. The banks used the bonds to refinance their own home-loan books.

The agency also predicted yesterday that house prices would fall a further 18 per cent and said that the market would not begin to recover until 2013. On the basis of this forecast, a further €33,000 will be wiped off the value of the average home in the Republic.

Building society EBS was the worst performer. Arrears rates in the €3.17 billion of mortgages covered by its Emerald bond increased to 4.76 per cent in March from 2 per cent a year earlier.

Default rates in the same portfolio trebled to 1.3 per cent, and the overall value of the bond was down 6 per cent from €3.4 billion.

First Active had arrears rates in the €3.9 billion of mortgages covered by its Celtic bond doubling to 6 per cent from 3 per cent. Defaults jumped to 1.9 per cent from 0.86 per cent.

Arrears rates in Bank of Ireland’s Kildare and Liberator bonds, which cover almost €2 billion worth of mortgages, increased to 3.2 per cent from 1.7 per cent.

Ulster Bank was the best performer. Arrears rates in the €4.48 billion of home loans covered by its Celtic bond increased to 2.2 per cent from 1.4 per cent.

Irish Life and Permanent saw no change, with arrears rates in its Fastnet bond remaining at 2.6 per cent.