Mortgage arrears fall but 70,000 borrowers still can’t meet payments

Central Bank figures show 87% of restructured mortgage holders meeting repayments

The value of accounts in longer-term arrears over 360 days remains large, amounting to just under €7.9 billion. File photograph: Alan Betson

The value of accounts in longer-term arrears over 360 days remains large, amounting to just under €7.9 billion. File photograph: Alan Betson

 

The number of homeowners in mortgage arrears fell in the fourth quarter of 2017, but more than 70,000 borrowers – or 10 per cent of the total market – are still struggling to meet repayments, new figures from the Central Bank show.

The number of accounts in arrears fell to 70,488, down almost 3 per cent since the end of September. This marked the 18th consecutive quarter over which the rate of arrears has fallen.

According to the Central Bank, the number of homeowners in arrears for more than 90 days also fell – to 6.6 per cent of the total market. It was close to 13 per cent five years ago.

The figures show that there were a further 118,477 mortgages classified as restructured at the end of last year, with 87 per cent of this cohort meeting the terms of new arrangements. That represents a slight decline in the numbers able to meet a new repayment schedule since September last year.

There was a continued reduction in short-term restructure arrangements such as interest-only and reduced payments options, and an increase in longer-term arrangements such as arrears capitalisation, the Central Bank said.

The Central Bank said meeting the terms of the arrangement was not a measure of sustainability, as not all restructure types represent longer-term sustainable solutions as defined within the Mortgage Arrears Resolution Target.

For instance, short-term interest-only restructures are, in general, not part of longer-term sustainable solutions. Inability to meet the terms of the arrangement implies that the restructure agreement put in place may not have been suitable.

Vulture funds

The figures also show that non-bank entities, including vulture funds, now hold 61,446 mortgage accounts, with 47,820 of those loans connected to homes rather than buy-to-let properties. Not all of those loans are in arrears.

All told, at the end of last year there were 729,722 private residential mortgage accounts for principal dwellings in the Republic, with the loan book said to be worth €98.5 billion.

Of the total stock, 70,488 were in arrears, a fall of 2,001 or 2.8 per cent between the third and fourth quarters of 2017.

Some 48,433 accounts – or 7 per cent of the total market – were in arrears of more than 90 days, a fall of 4.4 per cent over the same period.

However, accounts in arrears of up to 90 days increased by 254 or 1.2 per cent in the fourth quarter after a decline of 155 in the previous quarter.

The number of accounts in arrears over 360 days fell to 36,965 or 5 per cent of the total home mortgage market. Accounts in arrears of between 361 and 720 days show an increase of 483 accounts or 6.4 per cent over the quarter. The number of accounts in arrears over 720 days declined by 2,678 accounts or 8.5 per cent.

Accounts in arrears over 720 days now constitute 41 per cent of all accounts in arrears, with 89 per cent of arrears balances outstanding. For all institutions, the value of accounts in longer-term arrears over 360 days remains large, amounting to just under €7.9 billion.

At the end of last year there were 122,366 residential mortgage accounts for buy-to-let (BTL) properties held in the Republic of Ireland, to a value of €21.9 billion. Some 22,461 – or 18 per cent – of these accounts were in arrears, compared to 23,176 accounts at the end of September, reflecting a decrease of 3.1 per cent over the quarter.

Outstanding balance

Of the total BTL stock, 18,257 – or 15 per cent – were in arrears of more than 90 days, reflecting a decrease of 3.2 per cent over the quarter. The outstanding balance on all BTL mortgage accounts in arrears of more than 90 days was €5 billion at end-December, equivalent to 23 per cent of the total outstanding balance.

During the fourth quarter of 2017, repossession proceedings were issued on 829 private dwelling home (PDH) accounts and there were 413 mortgage accounts where court proceedings concluded but arrears remained outstanding.

In 258 accounts, the courts granted an order for repossession or sale of the property. There were 1,717 properties in the lenders’ possession at the beginning of the fourth quarter. A total of 311 properties were taken into possession by lenders during the quarter, down from 396 properties in the previous quarter.

Of the properties taken into possession during the quarter, 138 were repossessed on foot of a court order, while the remaining 173 were voluntarily surrendered or abandoned. During the quarter, 406 properties were disposed of. As a result, lenders were in possession of 1,622 PDH properties at the end of December 2017.

During the fourth quarter of 2017, rent receivers were appointed to 353 BTL accounts, bringing the stock of accounts with rent receivers appointed to 5,674; this is down from 5,701 accounts in the previous quarter.

Arrears in numbers

729,722 The number of private residential mortgage accounts for principal dwellings in the Republic of Ireland, to a value of

€98.5 billion – the value of that market

70,488 The number of accounts in arrears

48,433 The number of accounts in arrears of more than 90 days – 7 per cent of the total market

21,801 – Arrears up to 90 days

5,716 – Arrears between 90 and 180 days

5,812 – Arrears between 181 and 360 days

7,536 – Arrears between 361 and 720 days

31,624 – Arrears over 720 days