Credit, Collections & Insolvency News
Ireland’s Central Bank has published its latest mortgage arrears statistics from Quarter 1 of 2018.
Highlights include:
Residential Mortgage Arrears
At end-March 2018, there were 728,575 private residential mortgage accounts for principal dwellings held in the Republic of Ireland, to a value of €98.7 billion. Of this total stock, 71,833 accounts were in arrears, representing an increase of 316 accounts or 0.4 per cent over the quarter. Some 48,538 accounts (7 per cent) were in arrears of more than 90 days.
At end-March, the number of accounts in arrears increased, compared with end-December 2017. This is due to ‘Storm Emma’ impacting people being able to make payments at their branch. The increase was seen in the number of accounts in arrears up to 90 days. The number of accounts in arrears over 90 days fell by 1.7 per cent over the quarter, marking the eighteenth consecutive decline in this category. The outstanding balance on all lenders’ PDH mortgage accounts in arrears of more than 90 days was €10 billion at end-March, equivalent to 10 per cent of the total outstanding balance on all PDH mortgage accounts.
The number of accounts in arrears over 360 days fell to 37,348 at end-March, equivalent to 5 per cent of the total stock of PDH mortgage accounts and representing a fall of 532 accounts over the quarter. For all institutions, the value of accounts in longer-term arrears over 360 days remains large, amounting to just over €8.2 billion at end-March 2018. Accounts in arrears of between 361 and 720 days showed a decrease of 223 accounts or 2.8 per cent over the quarter. The number of accounts in arrears over 720 days declined by 309 accounts in March, or 1 per cent. This was the eleventh consecutive decline in this category. Accounts in arrears over 720 days now constitute 41 per cent of all accounts in arrears, and at €2.6 billion represent 90 per cent of arrears balances outstanding.
Restructuring Arrangements
A total stock of 117,334 PDH mortgage accounts were categorised as restructured at end-March 2018. This reflects a reduction of 1,519 accounts compared to end-December 2017. The share of interest only arrangements and reduced payment arrangements fell further over to quarter to end-March, to a combined total of 8.5 per cent, indicating a continuing move out of short-term arrangements. In contrast, split mortgage arrangements increased over the quarter, accounting for nearly one quarter of all restructure arrangements. Arrears capitalisation continued to account for the largest share of restructured accounts at 33 per cent at end-March.
A total of 5,446 new restructure arrangements were agreed during the first quarter of 2018, the lowest figure recorded since end-September 2012. The data on arrears and restructures indicate that of the total stock of 71,833 PDH accounts that were in arrears at end-March, 25,950 (36 per cent) were classified as restructured at that time. Of the total stock of 48,538 PDH accounts that were in arrears of more than 90 days, 29 per cent were classified as restructured; up slightly since last quarter.
Some 78 per cent of restructured accounts were not in arrears at end-March 2018. 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-March, 86 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.
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-March 2018, 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. Accordingly, the figures show that of the total stock of accounts in the arrears capitalisation category, some 22 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 Repossession
During the first quarter of 2018, legal proceedings were issued to enforce the debt/security on a PDH mortgage on 828 accounts. During Q1 2018, there were 501 mortgage accounts where court proceedings concluded but arrears remained outstanding. In 252 accounts, the Courts granted an order for repossession or sale of the property. There were 1,658 properties in the lenders’ possession at the beginning of the first quarter. A total of 321 properties were taken into possession by lenders during the quarter, up from 311 properties in the previous quarter. Of the properties taken into possession during the quarter, the majority of properties, at 258, were voluntary surrendered or abandoned. The remainder, at 63, were repossessed on foot of a Court Order. During the quarter, 174 properties were disposed of. As a result, lenders were in possession of 1,802 PDH properties at end-March 2018.
Residential Mortgages Arrears
At end-March 2018, there were 121,029 residential mortgage accounts for buy-to-let (BTL) properties held in the Republic of Ireland, to a value of €21.7 billion. Some 22,545 (19 per cent) of these accounts were in arrears, compared to 23,282 accounts at end-December 2017, reflecting a decrease of 3.2 per cent over the quarter. Of the total BTL stock, 18,363 or 15 per cent were in arrears of more than 90 days, reflecting a decrease of 3.4 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-March, equivalent to 24 per cent of the total outstanding balance.
The number of BTL accounts that were in arrears of more than 180 days was 17,040 at end-March 2018, reflecting a quarter-on-quarter fall of 2.7 per cent. BTL accounts in arrears greater than 720 days decreased by 3.2 per cent in the first quarter of 2018. Accounts in arrears of over 720 days now number 13,362 or 60 per cent of all BTL accounts in arrears. The outstanding balance on these accounts was €4 billion at end-March, equivalent to 18 per cent of the total outstanding balance on all BTL mortgage accounts.
Restructuring Arrangements
A total stock of 21,276 BTL mortgage accounts were categorised as restructured at end-March 2018, reflecting a decrease of 1,211 accounts over the quarter. Of the total stock of restructured accounts recorded at end-March, 80 per cent were not in arrears, while 86 per cent were meeting the terms of their current restructure arrangement. A total of 977 new restructure arrangements were agreed during the first 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 22,545 BTL accounts that were in arrears at end-March, 4,308 (or 19 per cent) were classified as restructured.
During the first quarter of 2018, rent receivers were appointed to 314 BTL accounts, bringing the stock of accounts with rent receivers appointed to 5,935; this is up from 5,894 accounts in the previous quarter. There were 1,789 BTL properties in the banks’ possession at the beginning of Q1 2018. A total of 154 properties were taken into possession by lenders during the quarter. Of the total BTL repossessions in the quarter, 26 were repossessed on foot of a Court Order, while the remaining 128 were voluntarily surrendered or abandoned. During Q1 2018, 85 properties were disposed of. As a result, lenders were in possession of 1,839 BTL properties at end-March 2018.