# Has the Central Bank changed its policy towards mortgages facing a shortfall on retirement?



## ClubMan (2 Aug 2021)

I thought that the CB's ongoing policy was that a mortgage on which the borrower only paid the interest was not considered sustainable/performing? Or have they changed their mind/policy on that in recent years? In general or only in specific cases?


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## Brendan Burgess (2 Aug 2021)

Hi ClubMan

I don't know. I thought the same as you, that ptsb would have to consider it a non performing loan if it's not paid off in full by retirement. 

Brendan


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## ClubMan (2 Aug 2021)

I tried to find info on how the CB categorise distressed mortgages but couldn't find anything. Anybody know if such info exists in the public domain? I'm pretty sure that in the past they considered a loan on which interest only or even interest and some capital were being repaid to be non performing and, more importantly, not sustainable.


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## Brendan Burgess (3 Aug 2021)

I found this speech by Ed Sibley 



			https://www.centralbank.ie/news/article/press-release-action-needed-by-lenders-to-resolve-long-term-mortgage-arrears-ed-sibley-13-july-2021
		


_The Deputy Governor’s comments coincided with the publication of four papers focused on distressed mortgage debt. These papers provide insights into:
_

_The economics of mortgage debt relief during a pandemic;_
_The approach to pandemic related mortgage payment breaks in Ireland;_
_Resolving long-term mortgage arrears; and_
_The level of mortgage borrowers potentially facing shortfalls in repaying their mortgages._
_He stressed that resolution of long-term mortgage arrears remains a key policy priority for the Central Bank, and that it is receiving significant focus._

I can't find the papers online. I have emailed the Central Bank to ask for them.

Brendan


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## Brendan Burgess (3 Aug 2021)

Here is an account of his speech









						Over-60s make up quarter of long-term mortgage arrears
					

Central Bank says lenders need to come up with more ‘extensive or ambitious’ solutions




					www.irishtimes.com
				



_
“Greater innovation is required, anchored by consideration of resolving the underlying affordability issues; and longer-term cost of credit for the borrower – and so, not overly relying on long-term interest only arrangements,” he said.

“A combination of modifications already regularly used within the lenders’ suites (for example, arrears capitalisations combined with term extensions, interest rate reductions, or split mortgages), and debt write-down in some cases, may allow many within this group to clear their mortgages by maturity and retain homeownership,” the paper said.

Meanwhile, another Central Bank paper published on Tuesday showed that lenders estimate that borrowers behind 95,000 owner-occupier loans – or 13 per cent of the total – are not currently on track to repay all that they owe by the end of their loan term.

Almost 63,000 accounts are assessed as having a shortfall of greater than 10 per cent of the balance, it said. Almost 45 per cent of these cases fall into the long-term arrears category._


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## RedOnion (3 Aug 2021)

Brendan Burgess said:


> I can't find the papers online. I have emailed the Central Bank to ask for them.


The longer version that the speech was based on should have the papers linked at the bottom:


			https://www.centralbank.ie/news/article/speech-the-need-for-continued-focus-on-resolving-long-term-mortgage-arrears-ed-sibley-13-july-2021
		


Here they are:



			https://www.centralbank.ie/statistics/statistical-publications/behind-the-data
		




			https://www.centralbank.ie/publication/financial-stability-notes
		




			https://www.centralbank.ie/publication/financial-stability-notes
		




			https://www.centralbank.ie/publication/financial-stability-notes


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## Brendan Burgess (3 Aug 2021)

Red

That is brilliant. Thanks.

Brendan


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## ClubMan (3 Aug 2021)

Without getting all Humpty Dumpty about it, does the CB actually clearly define anywhere what they mean by "sustainable" in the context of distressed/restructured mortgages and mortgage forebearance?


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## RedOnion (3 Aug 2021)

@ClubMan 

We discussed before in context of a proposed loan sale. There's an EBA document linked in the following thread:




__





						Details of ptsb sale of mortgages
					

ptsb gave more information today. There was a submission and I will try to get a copy of that. But I picked this up through watching it.   1,300 Buy to Lets have been surrendered recently and the shortfalls written off.  Of these, 2/3rds are still occupied by the tenants. 400 are empty and are...



					www.askaboutmoney.com
				




Just remember the CBI has multiple roles, and look at the borrower as well as the lender. 

I haven't had time to look at this particular case in detail.


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## ClubMan (3 Aug 2021)

Thanks. So the key term is probably "performing" rather than "sustainable"? But unfortunately what they consider "non performing" might arguably be "sustainable". E.g. lifetime interest only with the mortgage cleared on death by life assurance, other funds or sale?


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