The Central Bank reported today that the number of mortgage accounts in arrears has fallen again but while BTL (buy-to-let) mortgages have fallen, they are still at an extraordinarily high level despite the benefit of low tracker rates and in Dublin rents just 10% short of the 2007 peak.
The Bank said that at end-September 2014, there were 760,238 private residential mortgage accounts for principal dwellings (PDH) held in the Republic of Ireland, to a value of €105.5bn. Of this total stock, 117,889 accounts were in arrears, a fall of 8,116 or 6.4% over the quarter. Some 84,955 accounts (11.2%) were in arrears of more than 90 days.
A total of 109,911 mortgage accounts had been restructured at the end of September and this reflects an increase of 7.8% since the end of June.
Accounts in arrears over 720 days now constitute 31.8% of all accounts in arrears, and 73% of arrears outstanding. The Bank said: "It is worth noting that the pace of increase in very long-term arrears moderated significantly in Q3 with only a 1.1% quarter-on-quarter increase compared to a 5% increase in Q2. The total number of PDH accounts in arrears declined by 6.4% relative to Q2 (6.3% decline in value terms). Nonetheless, the value of accounts in longer-term arrears over 360 days remains large, amounting to €12.2bn at end-September."
At end-September 2014, there were 143,354 residential mortgage accounts for buy-to-let properties held in the Republic of Ireland, to a value of €28.8bn. Some 38,463 (26.8%) of these accounts were in arrears, compared to 39,669 (27.5%) at the end of June. Of this total stock of accounts, 31,619, or 22.1%, were in arrears of more than 90 days, reflecting a decrease of 0.4% over the quarter. Banks subject to the Central Bank’s MART targets recorded a slightly larger decline of 0.8% in the number of BTL accounts in arrears over 90 days. The outstanding balance on all lenders’ BTL mortgage accounts in arrears of more than 90 days was €8.9bn at end-September, equivalent to 30.8% of the total outstanding balance on all BTL mortgage accounts.
During the third quarter of 2014, legal proceedings were issued to enforce the debt/security on a PDH mortgage in 2,514 cases. Lenders were in possession of 1,393 PDH properties at end-September 2014.
A total of 83 BTL properties were taken into possession by lenders during the quarter and they were in possession of 634 BTL properties at end-September 2014.
Dermot O'Leary, chief economist at Goodbody, commented : "A mixed bag of opinions: The latest residential mortgage arrears statistics just released by the Central Bank provide a mixed bag of opinions on the progress in this area. On the one hand, it is encouraging that arrears continue to fall, particularly in the early stage categories. It is also encouraging that progress is being made on moving troubled mortgage accounts into a restructuring arrangement. On the other hand, outstanding questions remain about the appropriateness of the solutions which are being provided, with the largest cohort of restructured mortgages seeing one of the highest incidences of re-default.
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