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News : Property Last Updated: Mar 4, 2014 - 2:01 PM

Irish mortgages in arrears 360 days+ at 60,422 - 7.9% of total accounts
By Finfacts Team
Mar 4, 2014 - 1:53 PM

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The Central Bank said today the number of Irish mortgage accounts in arrears for principal dwelling houses (PDH) fell by 3.3% to 136,564  in the fourth quarter of 2013 from 141,269 at the end of the third quarter. This represents 17.9% of the total mortgage market. However, accounts 360 days+  in arrears grew to  60,422.

The value of PDH mortgages in arrears was €24.4bn.

The bank said that the number of mortgages in arrears of less than 90 days fell by 5.7% during the fourth quarter compared to a fall of 5.5% in the third quarter. 

However, longer term arrears continued to increase with the number of mortgages in arrears for over 360 days reaching 60,422 - 7.9% of the total stock of mortgage accounts. Within this category, accounts in arrears of over 720 days, rose by 1,755 to 33,589 and represent 24.6% of all accounts in arrears.

At end-December 2013, there were 145,530 residential mortgage accounts for buy-to-let properties held in the Republic of Ireland, to a value of €29.7bn. Some 39,250 (27 per cent) of these accounts were in arrears, compared to 40,396 (27.4 per cent) at the end of the third quarter. Of this total stock of accounts, 30,706, or 21.1 per cent, were in arrears of more than 90 days, reflecting a decrease of 1.5 per cent over the quarter. The outstanding balance on BTL mortgage accounts in arrears of more than 90 days was €8.7 billion at end-December, equivalent to 29.2 per cent of the total outstanding balance on all BTL mortgage accounts.

Central Bank  data: Residential Mortgage Arrears and Repossessions Statistics: Q4 2013

Dermot O'Leary, chief economist of Goodbody commented  -- "Arrears trending downwards…Mortgages in arrears over 90 days (in both value and value terms) fell for the first time since the crisis began in Q4 2013, indicating that stress in the system is easing, albeit from very high levels. In Q4, the value of arrears over 90 days fell to 19.6% of total mortgages, down from 20.0% of total in Q3 2013 (from 14.2% to 14.0% in volume). Adding in restructured mortgages, the total rises to 27.1% of total, representing a fall from 27.3% in Q3. 

…with both BTL and owner occupier arrears falling in Q4: While arrears on the Buy-to-Let book remain substantially larger, there were similarly positive trends in both books. There were 40.4% of BTL mortgages (by value) in arrears over 90 days or restructured in Q4 2013, down modestly from Q3 2013 (40.4%). This is first fall since the series began in June 2012. There were 23.4% of the owner-occupier book in arrears over 90 days or restructured, down from 23.6% in Q3.
 Large legacy issues remain to be dealt with: There are still large legacy issues that the banks have to deal with in the coming quarters. Specifically, the only category of arrears that experienced an increase in the quarter was “over 720 days”. In Q4 2013, there were 46,000 accounts in arrears of over 720 days with total arrears outstanding of €2.3bn. This highlights the need for realistic sustainable solutions to be put in place for those in late stage arrears.
 Questions remain about appropriateness of restructuring solutions: Recent quarters have seen a shift in the type of restructuring solutions being put in place by the banks. At the end of December, arrears capitalisation was the most popular solution (22% of total), followed by interest-only (19%), reduced payment (18%) and term extension (18%). The biggest change over the past 12 months has been the move away from interest-only to arrears capitalisation and term extension."

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