The Central Bank of Ireland has published its latest mortgage arrears data, Highlights from the report includes:

  • The number of mortgage accounts for principal dwelling houses (PDHs) in arrears fell further in the fourth quarter of 2017; this marks the eighteenth consecutive quarter of decline. A total of 70,488 accounts (10 per cent) were in arrears at end-December, a decline of 2.8 per cent relative to September 2017.
  • The number of PDH mortgage accounts that were classified as restructured at end-December was 118,477. Of these restructured accounts, 87 per cent were deemed to be meeting the terms of their current restructure arrangement, down slightly from the previous quarter. There was a continued reduction in short-term restructure arrangements such as Interest Only and Reduced Payments, which was partly offset by an increase in longer-term arrangements such as Arrears Capitilisations.
  • Non-bank entities now hold 61,446 mortgage accounts for principle dwelling houses and buy to lets combined. Of this number, 47,820 relate to PDH mortgage accounts, representing 7 per cent of all PDH mortgage accounts outstanding; 5 per cent are held by regulated retail credit firms with the remaining 2 per cent held by unregulated loan owners. Table 1 below further displays the breakdown of PDH mortgages and the arrears profile held by banks and non-bank entities.

At end-December 2017, there were 729,722 private residential mortgage accounts for principal dwellings held in the Republic of Ireland, to a value of €98.5 billion. Of this total stock, 70,488 accounts were in arrears, representing a fall of 2,001 accounts or 2.8 per cent over the quarter. Some 48,433 accounts (7 per cent) were in arrears of more than 90 days.

Quarter-on-quarter changes are impacted by a methodological change by a reporting institution. The number of accounts in arrears over 90 days fell by 4.4 per cent over the quarter, marking the seventeenth consecutive decline in this category. The outstanding balance on all lenders’ PDH mortgage accounts in arrears of more than 90 days was €9.7 billion at end-December, equivalent to 10 per cent of the total outstanding balance on all PDH mortgage accounts.

Accounts in arrears of up to 90 days increased by 254 accounts, or 1.2 per cent in the fourth quarter of 2017; this follows on from a decline of 155 accounts in the previous quarter. The number of accounts in arrears over 360 days fell to 36,965 at end-December, equivalent to 5 per cent of the total stock of PDH mortgage accounts and representing a fall of 2,195 accounts over the quarter. For all institutions, the value of accounts in longer-term arrears over 360 days remains large, amounting to just under €7.9 billion at end-December 2017.

Accounts in arrears of between 361 and 720 days show an increase of 483 accounts or 6.4 per cent over the quarter. The number of accounts in arrears over 720 days declined by 2,678 accounts in Q4, or 8.5 per cent. This was the tenth consecutive decline in this category and follows a 1.7 per cent fall in the previous quarter. Accounts in arrears over 720 days now constitute 41 per cent of all accounts in arrears, and 89 per cent of arrears balances outstanding. As referred to earlier, quarter-on-quarter changes are impacted by the methodological changes by a reporting institution.

Restructuring Arrangements

Forbearance techniques include: a switch to an interest only mortgage; a reduction in the payment amount; a temporary deferral of payment; extending the term of the mortgage; and capitalising arrears amounts and related interest[1]. The figures also include advanced modification options such as split mortgages and trade-down mortgages, which have been introduced to provide more long-term solutions for customers in difficulty.

A total stock of 118,477 PDH mortgage accounts were categorised as restructured at end-December 2017. This reflects a reduction of 574 accounts compared to end-September 2017. The share of interest only arrangements and reduced payment arrangements fell further during Q4, to 8.4 per cent, indicating a continuing move out of short-term arrangements. In contrast, arrears capitalisation arrangements increased over the quarter and continued to account for the largest share of restructured accounts at 33 per cent at end-December. A breakdown of restructured mortgages by type is presented in Figure 2.

A total of 6,476 new restructure arrangements were agreed during the fourth quarter of 2017, the lowest figure recorded since end-September 2012. The data on arrears and restructures indicate that of the total stock of 70,488 PDH accounts that were in arrears at end-December, 25,478 (36 per cent) were classified as restructured at that time. Of the total stock of 48,433 PDH accounts that were in arrears of more than 90 days, 28 per cent were classified as restructured; up slightly since last quarter.

Some 78 per cent of restructured accounts were not in arrears at end-December 2017. Restructured accounts in arrears include accounts that were in arrears prior to restructuring where the arrears balance has not yet been eliminated, as well as accounts that are in arrears on the current restructuring arrangement. At end- December, 87 per cent of restructured PDH accounts were deemed to be meeting the terms of their arrangement. This means that the borrower is, at a minimum, meeting the agreed monthly repayments according to the current restructure arrangement.

It is important to note that ‘meeting the terms of the arrangement’ is not a measure of sustainability, as not all restructure types represent longer-term sustainable solutions as defined within the Mortgage Arrears Resolution Targets. For instance, short-term interest only restructures are, in general, not part of longer-term sustainable solutions. The MART sustainability targets also include a significant number of accounts in arrears which are part of a legal process. These accounts are not classified as restructured within the Mortgage Arrears Statistics. Arrears associated with such accounts are recorded in full in the data.

Inability to meet the terms of the arrangement implies that the restructure agreement put in place may not have been suitable. Table 2 shows the percentage of restructured accounts that were deemed to be meeting the terms of their arrangement at end-December 2017, broken down by arrangement type. Lower numbers

indicate a greater number of borrowers are not currently meeting terms of new arrangement; this is particularly evident amongst cases in which a permanent interest rate reduction has been granted. As the figures in Table 2 only reflect compliance with the terms of the current restructure arrangement, we should expect to see a higher percentage of compliance among the restructure types that are likely to be shorter-term.[4] Accordingly, the figures show that of the total stock of accounts in the arrears capitalisation category, some 21 per cent of PDH accounts are not meeting terms of current restructure arrangement, i.e. the arrears balance has increased since the arrangement was put in place.

Legal Proceedings and Repossessions

During the fourth quarter of 2017, legal proceedings were issued to enforce the debt/security on a PDH mortgage on 829 accounts. During Q4 2017, there were 413 mortgage accounts where court proceedings concluded but arrears remained outstanding. In 258 accounts, the Courts granted an order for repossession or sale of the property. There were 1,717 properties in the lenders’ possession at the beginning of the fourth quarter. A total of 311 properties were taken into possession by lenders during the quarter, down from 396 properties in the previous quarter. Of the properties taken into possession during the quarter, 138 were repossessed on foot of a Court Order, while the remaining 173 were voluntarily surrendered or abandoned. During the quarter, 406 properties were disposed of. As a result, lenders were in possession of 1,622 PDH properties at end-December 2017.

Residential Mortgages on Buy-to-Let Properties

Arrears

At end-December 2017, there were 122,366 residential mortgage accounts for buy-to-let (BTL) properties held in the Republic of Ireland, to a value of €21.9 billion. Some 22,461 (18 per cent) of these accounts were in arrears, compared to 23,176 accounts at end-September 2017, reflecting a decrease of 3.1 per cent over the quarter. Of the total BTL stock, 18,257 or 15 per cent were in arrears of more than 90 days, reflecting a decrease of 3.2 per cent over the quarter. The outstanding balance on all BTL mortgage accounts in arrears of more than 90 days was €5 billion at end-December, equivalent to 23 per cent of the total outstanding balance.

The number of BTL accounts that were in arrears of more than 180 days was 16,759 at end-December 2017, reflecting a quarter-on-quarter fall of 4 per cent. BTL accounts in arrears greater than 720 days decreased by 3.6 per cent in the fourth quarter of 2017. Accounts in arrears of over 720 days now number 13,099 or 11 per cent of the total stock of BTL mortgage accounts. The outstanding balance on these accounts was €3.8 billion at end-December, equivalent to 17 per cent of the total outstanding balance on all BTL mortgage accounts.

Restructuring Arrangements

A total stock of 22,265 BTL mortgage accounts were categorised as restructured at end-December 2017, reflecting a decrease of 769 accounts over the quarter. Of the total stock of restructured accounts recorded at end-December, 79 per cent were not in arrears, while 87 per cent were meeting the terms of their current restructure arrangement. A total of 1,432 new restructure arrangements were agreed during the fourth quarter of the year, the lowest number of new restructures agreed in a quarter since this series began in 2012. On the BTL side, the largest cohort of restructured mortgages was in arrears capitalisation arrangements, which represented 23 per cent of all restructure arrangements. The data on arrears and restructures indicate that of the total stock of 22,461 BTL accounts that were in arrears at end-December, 4,706 (or 21 per cent) were classified as restructured at that time.

Legal Proceedings and Repossessions

During the fourth quarter of 2017, rent receivers were appointed to 353 BTL accounts, bringing the stock of accounts with rent receivers appointed to 5,674; this is down from 5,701 accounts in the previous quarter. There were 731 BTL properties in the banks’ possession at the beginning of Q4 2017. BTL repossessions in Q4 2017 were impacted by an initiative for assisted voluntary surrender of properties. A total of 1,230 properties were taken into possession by lenders during the quarter. Of the total BTL repossessions in the quarter, 39 were repossessed on foot of a Court Order, while the remaining 1,191 were voluntarily surrendered or abandoned. During Q4 2017, 178 properties were disposed of. As a result, lenders were in possession of 1,783 BTL properties at end-December 2017. 

Residential Mortgages held by Non-Bank Entities

Arrears

At end-December 2017, non-bank entities accounted for 7 per cent of the total stock of PDH mortgage accounts outstanding. For BTLs the proportion was higher at just over 11 per cent. Overall, non-bank entities accounted for just over 7 per cent of the total stock of residential mortgage accounts outstanding (PDH and BTL) at end-December 2017 (9 per cent in value terms).

In terms of PDH mortgages held by non-bank entities, 77 per cent were held by regulated retail credit firms at end-December 2017. For retail credit firms, 16 per cent of accounts were in arrears over 90 days, with 7 per cent in arrears of over 720 days (Table 5). The equivalent figures for unregulated loan owners was 50 per cent and 42 per cent, respectively. Restructuring activity was lower among retail credit firms, with 18 per cent of loans restructured at end-December, compared to 21 per cent for unregulated loan owners.

In terms of BTL mortgages held by non-bank entities, a higher number of BTL accounts are held by retail credit firms compared with unregulated loan owners. Retail credit firms account for 51 per cent of total loan accounts held by non-bank entities. For retail credit firms, 24 per cent of accounts were in arrears, with 14 per cent of accounts in arrears of 720 days. The number of BTL accounts in arrears for unregulated loan owners was particularly high, with 78 per cent accounts in arrears, and over 65 per cent of all accounts in arrears over 720 days at end-December 2017.

Legal Proceedings and Repossessions

There were 408 properties in non-bank entities’ possession at the end of the fourth quarter, with 128 properties held by retail credit firms, and 280 held by unregulated loan owners.  Some 28 properties were taken into possession by non-bank entities during the quarter, down from 52 properties in the previous quarter. Of the properties taken into possession during the quarter, 10 were repossessed on foot of a Court Order, while the remaining 18 were voluntarily surrendered or abandoned. During the quarter, 56 properties were disposed of.

Click here to view information charts and related data tables