Key Post Q1 2014 Mortgage Arrears Stats issued

[Brendan Burgess]

[broken link removed]

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 per cent) of accounts were in arrears at end Q1 2014, a decline of 3.2 per cent relative to Q4 2013.

...
The largest increases in restructures were recorded for split mortgages, with over 5,000 new arrangements agreed during the quarter. Arrears capitalisation restructures also grew strongly over the quarter.

|Accounts|Homes| Arrears
Less than 90 days|39,111|31,300|€66m
90 -360 days|32,557|26,000|€241m
Over 1 year|25,235|20,200|€475m
Over 2 years|35,314|22,300|€1.6 b
Total|132,000|105,600|€2.4billion

In the Q4 2013 stats, they had a note: "A total of 136,564 (17.9 per cent) of accounts were in arrears at end Q4 2013, a decline of 3.3 per cent relative to end-Q3, although the size of the decline was impacted by asset sales over the quarter." I checked with the CB and they have told me that the Q1 figures are not affected by asset sales.

 

[Brendan Burgess]

The trend in accounts over 90 days - PDH's

|Q4 2012|Q1 2013|Q2 2013|Q3 2013|Q4 2013|Q1 2014
Accounts >90 days|94,488|||||93,106
Total mortgage accounts|792,000|||||762,000
accounts >90 days|11.9%|12.3%|12.7%|12.9%|12.6%|12.2%
cases capitalised|9,754|||||22,624
split mortgages|52|||||8,388

% of loan accounts in arrears for more than 90 days


This is very odd.

One would expect the underlying natural trend to be downwards

• The CCMA has been amended so banks are free to call borrowers now
• The emargo on repossessions has been lifted
• Unemployment has fallen so people should be in a better position.

But one would also expect the reported figures to be even further downwards

• 13,000 extra cases have had their arrears capitalised - so they should be out of these numbers
• 8,000 split mortgages have been issued , which should also result in lower arrears (There is crossover between splits and capitalisation)

I thought that the individual banks have reported that the figures are falling, but these stats don't seem to support that.

ptsb: The bank reported a drop in early and late stage arrears across all portfolios with overall levels 10% below the peak reached last year.
AIB: The pace of formation of new impaired loans continued to reduce, it added. The total arrears in its Irish residential mortgage portfolio was stable in the first quarter with both early arrears and arrears of over 90 days declining. (Ok that is a bit vague)
Bank of Ireland:

I can't understand why the figures are not falling much more rapidly

On the other hand, Fitch says that they are still rising.

 

[Brendan Burgess]

Residential Mortgages issued by Non-Bank Lenders
Non-bank lenders accounted for 2 per cent of the total stock of residential mortgage accounts outstanding
at end-March 2014 (2.6 per cent in value terms). A total of 8,712 mortgage accounts issued by these
lenders were in arrears of more than 90 days at end-March. The outstanding balance on these accounts
was €1.9 billion, equivalent to 53.6 per cent of the total outstanding balance on all mortgage accounts
issued by non-bank lenders.

 

[bugler]

I can't understand why the figures are not falling much more rapidly

Perhaps because:

- Repossessions are still not occurring at any noticeable rate. If the banks maintain their current rate of repossessing BTL properties it will take them approximately 45 years to work through the > 720 day cases (assuming that category ceased growing today!)

- The main restructuring tool used by the banks (arrears capitalisation) is also the least successful. A significant percentage of those who get this "solution" re-default relatively soon after. The BTL re-default rate is particularly bad.

- I suspect there may be a larger rump of cases than anticipated where the borrowers do not wish or intend to get "back on track". They are disengaged, despite the fact they may be technically in touch with their bank over the mortgages. They may be preparing to surrender, or they may be dragging the process out for as long as possible.