Analysis: Banks may be backing off as fewer repossession cases initiated

Banks are continuing to obtain home repossession orders in increasing numbers.

However, the rate at which they are initiating the arduous legal process to obtain such orders appears to be levelling off, the latest figures from the Courts Service indicate.

Detailed data released to The Irish Times covering the State's 26 circuit courts – where the vast majority of repossession orders are sought – shows some 1,088 repossession orders were made to the end of September this year. This is a 70 per cent increase on the 644 orders granted in the same period last year, and 350 per cent more than the 240 granted in the period in 2013.

Dramatic increase

Of the 1,088 orders made, 758 were for primary homes, 131 were for buy-to-lets and199 were for ‘other’ dwellings.

The trend is generally up across the State, with some small exceptions such as a fall in Carlow from 15 in the first nine months of last yearto 14 in the same period this year, and from 16 in Leitrim last year to nine this year.

The biggest increases are in urban centres outside Dublin and in the commuter counties close to Dublin.

In Galway, where there were five orders in the first nine months of last year, there were 39 this year.

In Wexford, there were 21 orders granted in the first nine months of last year, and 78 in the same period this year. In Wicklow, where there were 14 orders between January and September last year, there were 41 to the end of September.

Cork has seen a dramatic increase. While there were 38 orders made against dwellings in Cork city and county in the first nine months of 2014, there was a more than 300 per cent increase to 153 this year.

Of Cork’s total so far this year, 112 were for primary homes, four for buy-to-lets and 37 for ‘other’ dwellings.

The Dublin situation is interesting and one can but speculate as to what is happening. The number of orders is down in the capital – from 148 in the first nine months of last year to 127 this year. Of this year’s, 86 were for primary homes, 20 for buy-to-lets and 21 for ‘other’ dwellings.

While cynics may suggest lenders are waiting for property prices to increase even further in the capital before moving to repossess, the truth is repossession orders are only made after a series of court adjournments. As a result, many cases take several years before resulting in repossession.

The falling number of orders in Dublin is a result of fewer cases being lodged, or more lenders and borrowers coming to mutual arrangements before the case reaches the point of repossession.

Bottleneck

It is also likely banks began moving to repossess homes in big numbers in Dublin a year or so ahead of doing so in Cork and the commuter counties. The large bottleneck of cases in Dublin seems to be clearing, with numbers now levelling off – though not stopping, it must be stressed. Meanwhile, other centres are ‘catching up’ with the capital.

This trend would mirror the situation with homelessness, where we are seeing bigger proportionate increases in the number of households becoming homeless as a result of rising rents in the commuter counties, as well as Cork and Galway, than in Dublin.

The fall in the number of civil bills for repossession being lodged may also indicate a levelling off in repossession activity by the banks. The number of bills lodged fell by 30 per cent in the first nine months of this year – when 4,440 bills were lodged – compared with 6,420 in the same period last year.

Of course, this does not mean banks have abandoned moves to take back properties. They may still foreclose where a borrower does not pay their mortgage, which does not require initiating legal proceedings.

Data on foreclosures is held by the banks and more difficult to access than data from the courts.