Irish Mortgages: 35,314 home mortgages in arrears 720 days+; 39,250 BTL accounts in arrears
By Michael Hennigan, Finfacts founder and editor
Jun 5, 2014 - 12:24 PM

Printer-friendly page from Finfacts Ireland Business News - Click for the News Main Page - A service of the Finfacts Ireland Business and Finance Portal

The number of mortgage accounts  for principal dwelling houses (PDH) in arrears for over 90 days dropped for the third straight quarter in a row in the three months to the end of March 2014, data from the Central Bank today show. However the numbers of arrears for 720 days or more rose 5% in the first quarter to 35,314 mortgage accounts were in arrears for over 720 days - - with an outstanding balances of €7.4bn. Meanwhile, a total of 39,361 BTL (buy-to-let) accounts were in arrears.

The data show that the proportion of residential mortgages in arrears for more than 90 days was 12.2% at the end of the quarter, down from 12.6% in the previous three months.

There was a total stock of 92,442 PDH mortgage accounts classified as restructured at end-March, reflecting a quarter-on-quarter increase of 10%. Of these restructured accounts, 80.6% were deemed to be meeting the terms of their current restructure arrangement.

The number of buy-to-let (BTL) mortgage accounts in arrears showed a slight increase from 39,250 (27%) to 39,361 (27.2%) in the first quarter of 2014. This increase was entirely driven by accounts in very long-term arrears, with the  increase in arrears of over 720 days outpacing the  decrease in arrears up to 720 days.

There were 13,282 (9.2%) residential mortgage accounts for BTL properties in arrears of over 720 days at end-March 2014, up from 12,218 (8.4%) at end-December 2013. The outstanding balance on these accounts at end-March was €4.2bn.

This BTL situation is bizarre -- in Dublin rents are rising while the repayments on these mortgages has plunged sine 2008:

Finfacts: Most Irish buy-to-let mortgages in arrears on low-cost trackers

The number of mortgage accounts for principal dwelling houses (PDH) in arrears, fell for the third consecutive quarter in Q1 2014. A total of 132,217 (17.3%) of accounts were in arrears at end Q1 2014, a decline of 3.2% relative to Q4 2013. 

Conall Mac Coille, chief economist at Davy, commented: "Today’s arrears data show a welcome 3.2% decline in the number of owner-occupiers in mortgage arrears. The 90+ day arrears rate has fallen again to 12.2%. Early arrears formation continues to improve. However, among buy-to-let investors, the 90+ day arrears rate rose to a fresh high of 21.5%.

Furthermore, numbers in long-term arrears continue to rise. Among owner-occupiers, 35,314 mortgage accounts have been in arrears for over 720 days and comprise €1.6bn, or 68%, of the total €2.4bn stock of mortgage arrears. Similarly, 9.2% of buy-to-let investors have now been in arrears for over 720 days and account for 73% of the stock of €1.6bn of arrears.

However, today’s data show the stock of modified mortgage loans grew by 10% for owner-occupiers in Q1 2014, rising to 92,442. This no doubt reflects efforts by banks to satisfy the Central Bank’s mortgage arrears resolution targets. In Q1 2014, 80.6% of owner-occupiers and 76.6% of buy-to-let investors were meeting the terms of their new arrangement.

Not surprisingly, performance was most favourable for permanent modifications. For example, 96% of both owner-occupiers and buy-to-let investors were meeting the terms of split mortgage modifications. Split mortgages now account for 9.1% of owner-occupier mortgage restructures. In total, there were 5,000 split mortgages agreed during Q1 2014. However, in total, 25,801 new restructure arrangements (including modifications of existing restructures) were agreed in Q1 2014."

David Hall, CEO of IMHO (Irish Mortgage Holders Organisation) commented: “In recent weeks there have been heightened concerns in relation to homelessness. The number of people potentially facing homelessness through inaction in tackling arrears could now be 35,314. This does not include children or partners of the people with the mortgage. The real figure could potentially be up to 90,000. In addition 53% of loans issued by non-bank lenders, for example county councils are in arrears. This is a further silent time bomb as many of these homeowners may find themselves reliant on a social housing system that is at breaking point.“

In addition, today’s figures confirm the view of the IMHO that banks are attempting to control the property market by not dealing with Buy-to-Let (BTL) arrears. The total number of BTL mortgages in arrears rose by 0.3% quarter on quarter and those in arrears for 720 days or longer are up 8.7%.

Dr Constantin Gurdgiev, director, IMHO added: "Across both PDH and BTL mortgages, recent push by the banks to restructure mortgages in arrears is yielding some limited success. In Q1 of 2014 the total number of mortgages in arrears in Ireland fell by 2.4%. However, number of all mortgages in arrears over 720 days is up 6% or 2,793. The balance of arrears is up from €3,591m in Q4 2013 to €3,967m in Q1 2014. These numbers suggest an increase in debt burden in the near future for households already showing severe strain in repaying the mortgages.”

The IMHO said it has major concerns in relation to some of the “forbearance arrangements” being used. 24.5% of those in arrears have had their arrears capitalised, there is no evidence of the cause of the arrears being addressed which might explain the significant number of these cases which fail to be able to meet the payments amount which is 35% an 67% in buy to lets.

The report states “of the total stock of restructured accounts at end march 2014, 58% were not in arrears” this means an alarming number of cases, some 42% already restructured are still in arrears.

"It is very concerning that short term interest is being used only as a restructure for those in arrears of 90 days and above without any evidence of sustainability."

© Copyright 2011 by