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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
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:
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
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
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