Buy to let arrears data published for the first time

[Brendan Burgess]

The Central Bank has published buy to let arrears data for the first time today
[broken link removed]

No arrears|112,903|75%
In arrears up to 90 days|9,919| 7 %
90 to 180 days| 4,942 |3%
181-360| 6,976 | 5 %
361-720|8,224| 5 %
Over 2 years| 6,628 | 5 %
Total| 149,592

And the total arrears figure built up over the last 5 years?

€953,598 million or 3% of the €31 billion loan book

 

[Brendan Burgess]

These figures are not nearly as bad as what was reported of Fiona Muldoon's speech to the IBF.

I got the impression that around 30% of buy to let mortgages were more than 90 days in arrears. The actual figure is 18%. Still very high, but not 30%

I see that the Irish Examiner got this impression as well.

Buy-to-let mortgage arrears hit 29%

By John Walsh, Business Correspondent
Thursday, November 29, 2012

Nearly €10bn worth of mortgages in the buy-to-let sector are in arrears of 90 days or more, according to provisional data released by the Central Bank.

Of the €32bn in outstanding mortgages, 29% are in arrears by more than 90 days.

and the , so I wasn't imagining it.

Director of banking supervision Fiona Muldoon has revealed that 37,000 buy-to-let mortgages are in arrears -- payments are three months or more behind.

 

[terrontress]

I don't think anyone is surprised but the question is what the banks are doing with BTL in arrears as their strategies tend to revolve around keeping people in their homes. I would expect to see a much harder line taken on BTLs but I am sure the bank don't want to have property on their hands to manage, especially if there is a tenant in situ.

 

[Bronte]

Does Fiona Muldoon have access to different statistics than the central bank. Or maybe she counts them differently?

 

[ClubMan]

Any chance she meant 30% by value rather than by number of mortgages which is what the figures above seem to deal with?

Update: oops - just read Brendan's second post which seems to indicate that she meant the latter after all...

 

[Brendan Burgess]

OK, I have resolved the discrepancy and well done Clubman

The figures are on page 7 of her [broken link removed]

She said 20% of accounts were more than 90 days in arrears, but this represents 30% of the book.

A further 11% of accounts have been restructured.

Brendan

 

[Bronte]

So she is including restructued as well as arrears to get the 30%.

Isn't most restructering just kicking the can down the road?

 

[Brendan Burgess]

No and No.

She gave the right figures and they were misquoted.

Restructuring, especially in the case of buy to let, is not just kicking the can down the road.

In most buy to lets in arrears, the rent is covering at least the interest payment, so that is keeping the can very firmly on the road. The investment is profitable in ordinary terms, but they just can't make the capital repayments.

There is no real need for a property investor to repay their capital every month. They can repay it by selling the property.

Brendan

 

[oldnick]

...assuming the property is worth the same/more than the capital owed which is rarely the case for those BTl owners who bought in the boom.

Indeed, I wonder how many boom buyrs can even afford the interest-only/other running costs from rentals.

 

[ClubMan]

...assuming the property is worth the same/more than the capital owed which is rarely the case for those BTl owners who bought in the boom.

I thought that rental yields were the important thing in this context? So somebody who did their homework and figured out a sutstainable business model here should be fine for the moment regardless of the prevailing market value of the property?

Indeed, I wonder how many boom buyrs can even afford the interest-only/other running costs from rentals.

The figures above presumably give some idea?

 

[Kine]

I wonder is there any fudge in the numbers for people who have moved out of the home as a PPR for whatever reason (i.e. it was not originally a BTL) and are in arrears, but the mortgage is still classed as a non-BTL?