IBF Statement on Mortgage Arrears

Today’s Central Bank figures show a welcome decrease in the overall number of mortgage accounts in arrears for principal dwelling houses (PDHs)  – the first decrease since the series began in September 2009.

The rate at which people are falling into arrears is falling across all categories with the exception of accounts in long-term arrears of over 720 days.   It is recognised that this continues to pose a significant challenge for lenders and borrowers alike.

It is notable that the number of accounts in early stage arrears (up to 90 days) has declined by 6% on the previous quarter and that the number of accounts with arrears up to 180 days has fallen by 15.5% since the peak in Q3 2012.

These trends are evident in the following graph.

  • Reduction in the rate of early arrears of up to 90 days
  • Reduction in the rate of arrears 91-180 days
  • Reduction in the rate of arrears 181-360 days
  • Reduction in the rate of arrears 361 – 720 days
  • Increase in the rate of arrears over 720 days

Mortgage Arrears web

Today’s figures also reflect a number of emerging trends in restructured arrangements which mark the evolution to longer-term, sustainable solutions on offer from lenders:

  • More than three-quarters (78.9%) of the 80,555 restructured PDH accounts are meeting their repayment terms; a similar proportion (77.9%) of the 21,607 Buy-to-Let (BTL) restructures in place are meeting their repayment terms. As in the case of PDH accounts, the overall increase recorded in the number of BTL mortgage accounts in arrears is driven by longer-term arrears, with the number of accounts in arrears of up to 180 days declining.
  • Growth is evident in a number of areas of restructuring including arrears capitalisation, term extension and split mortgage.

In dealing with the considerable challenge posed by the resolution of mortgage arrears, IBF and its member banks share the Central Bank’s objective to return as many loans as possible to performing status and to make such modifications to loans as are necessary to ensure a sustainable outcome.  In continuing to successfully meet the Central Bank’s mortgage arrears resolution targets the number of distressed customers offered longer-term sustainable resolutions can be expected to increase.  However, the transition from short-term forbearance to these resolutions requires sensitive management of a myriad of situations where borrowers have to consider the resolutions proposed.

Note: The Irish Banking Federation (IBF) is the principal voice of the banking and financial services sector in Ireland, representing over 70 member institutions and associates, including licensed domestic and foreign banks and institutions operating in the financial marketplace here.

Contact: Jillian Heffernan, Marketing Communications Manager, IBF, ph: 01 474 8835 / 087 9016880

Mortgage Approvals Increase in October – IBF

The latest figures from the IBF Mortgage Approvals Report, published by the Irish Banking Federation (IBF), show that 1,879 mortgages to the value of €347 million were approved by lenders here during the month of October.

The following are the key elements:

  • A total of 1,879 mortgages were approved in October, of which 1,744 (92%) were for house purchase.
  • The number of mortgages approved increased by 12% on an annual basis (from October 2012) and rose 12.3% on a monthly basis (from September 2013).
  • The value of mortgages approved in October was €347m, the highest level since the series began in 2011. A total of €335m of this (97%) was for house purchase.
  • The value of mortgage approvals grew by 22.3% on an annual basis and increased by 23.5% on a monthly basis.

The following graph presents the trend in approvals on a monthly basis since the series began in 2011

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This graph presents the cumulative year to date trend in mortgage approvals up to  October each year

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Commenting on the figures, IBF Chief Executive, Noel Brett, stated:
“This latest increase in the level of mortgage approvals, while coming from a low base, is very welcome and is testament to banks’ willingness and capacity to lend to customers who meet the criteria for a mortgage.  As always, it remains to be seen the extent to which these approvals will translate into actual drawdowns by customers.  Feedback from a recent IBF roundtable involving lenders, estate agents, brokers, surveyors and building interests pointed to a consensus that the supply of suitable family homes in key locations is an increasingly important challenge; and that this requires the attention of policy makers and local authorities.”
Data collection for the IBF Mortgage Approvals Report began in August 2012 covering the period from January 2011 onwards in respect of the market’s main mortgage lenders. The report is attached as a pdf and can be viewed on the IBF website here.

Note: The Irish Banking Federation (IBF) is the principal voice of the banking and financial services sector in Ireland, representing over 70 member institutions and associates, including licensed domestic and foreign banks and institutions operating in the financial marketplace here.

Contact: Jillian Heffernan, Marketing Communications Manager, IBF Ph: 01 4748835 / 087 9016880

IBF Housing Market Monitor shows housing market remains at stabilisation stage

  • Most indicators of activity trending up

The IBF Housing Market Monitor Q3 2013, published today by the Irish Banking Federation (IBF), shows that, while most of the indicators of housing market activity are trending upwards, the market overall remains at the stabilisation stage.  The upward trend is evident in year-on-year increases in the number of dwellings listed for sale, the number of property transactions and in the level of mortgage drawdowns.

Drawing on various published data on the residential housing market to provide a composite analysis on where the market may be going, the IBF Housing Market Monitor shows the following in Q3 2013 compared to the same period in the previous year:

  • 29.7% increase in the number of properties listed for sale
  • 19.2% increase in the number of housing market transactions
  • 14.7% increase in the level of mortgage drawdowns

As has been evident over previous quarters, Dublin in particular continues to be a key driver behind these trends.

In his commentary accompanying the IBF Housing Market Monitor, Investec Chief Economist, Philip O’Sullivan, believes that the improving economic backdrop should underpin a gradual recovery from here; but this will be subject to a number of challenges including the impact of an expected rise in repossessions, banking sector stress tests and the release of further supply from NAMA and the banks.

While acknowledging that a sustained steep upward move in Dublin property prices would be unwelcome, he goes on to play down concern about a property price ‘bubble’:

“The current double-digit rate of inflation in Dublin property prices has given rise to concern in some quarters that a ‘bubble’ may be beginning to emerge in the capital. I view such talk as overdone for now, as: (i) based on the CSO’s Residential Property Price Index, this move has only resulted in the -57% peak-to-trough fall in Dublin prices improving to a ‘peak-to-current level’ of -51%; (ii) rental yields, as per the latest Daft.ie report, across the capital range from 5.6-8.2%, well above the cost of funding; and (iii) the low volume of transactions seen at the trough in the cycle may have exaggerated the extent of the fall (here I would point to reports that 40% of recent Dublin transactions involved executor sales).”

And he proposes the introduction of temporary tax incentives as a means of alleviating the current shortage of family homes in Dublin:

 “In the absence of any meaningful new build activity, in order to help moderate the current upswing in Dublin prices, policymakers should consider introducing tax measures to encourage ‘empty nesters’ to trade down, thus alleviating the current shortage of family homes in the city.”

The IBF Housing Market Monitor is published quarterly and can be viewed on the IBF website here.

Note: The Irish Banking Federation (IBF) is the principal voice of the banking and financial services sector in Ireland, representing over 70 member institutions and associates, including licensed domestic and foreign banks and institutions operating in the financial marketplace here.

Further Information: Jillian Heffernan, IBF Marketing Communications Manager,

Ph: 01 474 8835 / 087 9016880

IBF National Conference 2013 – Banking for Sustainable Growth

The Irish Banking Federation held its National Conference today in the Radisson BLU Royal Dublin Hotel, Golden Lane, Dublin 8. Hosting a gathering of Irish, UK and European senior policy makers and industry leaders, the conference, Banking for Sustainable Growth, discussed the direction in which banks need to go in the post-crisis landscape in order to rebuild growth, sustainability and profitability.

No Repro Fee 20-11-13 Picture shows from left Dr Diego Rodriguez-Palenzuela, Advisor, Directorate Monetary Policy, European Central Bank ; Noel Brett, Chief Executive, Irish Banking Federation; and Hans van der Noordaa, CEO of ING Retail Banking BeNeLux ;  at the Irish Banking Federation (IBF) National Conference 2013.Pic: Naoise Culhane - no fee For Business Desk

Picture (L to R) at today’s IBF National Conference are Dr. Diego Rodriguez-Palenzuela, Adviser, Directorate Monetary Policy, European Central Bank, Noel Brett, Chief Executive, IBF and Hans van der Noordaa, CEO, ING Retail Banking Benelux

Speaking at the conference, John Reynolds, President of the Irish Banking Federation, announced a new Protocol on Multi-Banked SME Debt, saying “We fully recognise the challenges posed by legacy SME debt and are committed as a sector to do all that we can to help distressed SMEs to manage the situation as effectively as possible and to become viable again.  I am therefore pleased to announce today that a new Protocol on Multi-Banked SME Debt has been developed by the SME-lending banks under the auspices of the IBF.  The objective of this Protocol is to create a framework that allows an SME in financial difficulty, with multi-banked debt, to communicate with the relevant banks on a collective basis and to allow those banks to collectively discuss and consider the case.  For purposes of the Protocol, multi-banked SME debt comprises the following three categories: direct SME debt advanced directly to the SME to finance the business, indirect SME debt advanced indirectly to the SME business to finance assets, such as premises, that are essential to the running of the business; and SME- related debt which depends primarily for its repayment on the viability and cash flow of the business.  SME lenders are currently making the necessary preparations for the implementation of this Protocol in a few weeks’ time on 2nd January 2014 and we look forward to its having a beneficial impact on the bank/SME relationship.”

Noel Brett, Chief Executive, Irish Banking Federation, said “As the principal voice of the banking and financial services sector, we are especially mindful of our role in helping to make the sector economically sustainable and profitable again so as to play its pivotal role in our economic recovery.  In light of past events we are more mindful than ever of our wider societal role too.  Ireland and Europe will only recover and start to perform at the optimum level when there is a sustainable, profitable, fully functioning banking industry. Today has outlined some potential strategies to define and deliver the new shape of banking in Ireland. What is required now is delivery. Banks must adopt robust strategies to deliver the new shape for their business so that they can play their full part in Ireland’s continued economic and social recovery.”

Among those contributing to the conference were: Hans van der Noordaa, CEO, ING Retail Banking BeNeLux; Dr. Diego Rodriguez-Palenzuela, Adviser, Directorate Monetary Policy, European Central Bank, Tony Foley, Economist, Dublin City University Business School and Mark Gilbert, London Bureau Chief, Bloomberg News. Each addressed the conference on the policy, regulatory, consumer and other external trends shaping currently shaping the banking industry. Jim Barry, Managing Director and Chief Investment Officer of the Renewable Power Group, BlackRock Alternative Investors and Dara Deering, Executive Director and Head of Retail Banking, KBC Bank Ireland plc, addressed the conference on banking business strategies in the new banking landscape.

Chand Kohli, Partner and Head of Financial Services Practice, PwC, the conference’s principal sponsor, also addressed the conference.

For a full copy of the welcome address given by John Reynolds, IBF President, click here.

IBF National Conference – 20th November 2013

Pictured L to R: Dr. Diego Rodriguez-Palenzuela, Adviser, Directorate Monetary Policy, European Central Bank, Noel Brett, Chief Executive, IBF and Hans van der Noordaa, CEO, ING Retail Banking Benelux

Each year this flagship event attracts a host of senior bankers, regulators, policy makers and commentators, providing an exclusive forum to discuss and debate the critical issues affecting the sector.

This year’s conference, Banking for Sustainable Growth, took place on Wednesday 20th November, in the Radisson Blu Hotel, Dublin. Hosting a gathering of Irish, UK and European senior policy makers and industry leaders, the conference discussed the direction in which banks need to go in the post-crisis landscape in order to rebuild growth, sustainability and profitability.

Trading environment for many SMEs made challenging by weak domestic demand

  • Gradual recovery in domestic demand expected over the medium term

A newly-launched monitor of SME market activity, the DKM/IBF SME Market Monitor, points to a difficult trading environment for many SMEs.  Key indicators such as domestic demand, retail sales and disposable income remain weak; however, the Monitor also points to evidence of an uplift in some indicators which could augur well for SMEs’ prospects.

SME Monitor publication

Annette Hughes, Director, DKM Economic Consultants and Noel Brett, CEO, IBF pictured at the publication of the new DKM/IBF SME Market Monitor

Prepared by DKM Economic Consultants for IBF, the DKM/IBF SME Market Monitor looks at 15 published indicators which are important for the performance of Small and Medium-Sized (SME) businesses.  By looking at the totality of this data DKM assesses the future prospects for the Irish SME market as a whole.  And while certain indicators such as the Consumer Sentiment Index and the Purchasing Managers’ Index are heading in the right direction for SMEs, a number of other key indicators are trending down or are at best flat – namely, domestic demand, retail sales and disposable income.

DKM’s Annette Hughes states:

“The picture which emerges is one of a fragile domestic economy in which personal consumption, government spending and investment continue to struggle….Similarly, the Retail Sales Index has been relatively stagnant for some time now, both including and excluding motor sales.  Any meaningful pickup in retail sales and thus SME activity will require a sustained increase in disposable incomes and a willingness amongst consumers to spend.”

According to Hughes, for a meaningful improvement in their prospects SMEs need to see a continued improvement in consumer sentiment and further improvement in employment which will support disposable incomes.  Evidence of an uplift in the domestic economy will drive demand for credit.  We can expect to see a gradual recovery in domestic demand over the medium term, she concludes.

The DKM/IBF SME Market Monitor can be viewed on the IBF website here

Note: The Irish Banking Federation (IBF) is the principal voice of the banking and financial services sector in Ireland, representing over 70 member institutions and associates, including licensed domestic and foreign banks and institutions operating in the financial marketplace here.

Contact: Annette Hughes, Director DKM Consultants, Ph1 6670372

Jillian Heffernan, Marketing Communications Manager, IBF, Ph: 01 4748835 / 087 9016880

Mortgage Market Activity Strengthens in Q3 2013

  • 4,482 mortgages drawn down in Q3 2013 to the value of €750 million
  • Activity up 12.5% year-on-year and 38.8% quarter-on-quarter
  • Over 90% of new mortgage credit now going to home purchasers

The latest figures from the IBF/PwC Mortgage Market Profile, published today, show that a total of 4,482 new mortgages to the value of €750 million were drawn down by borrowers here during the third quarter of 2013.  This represents an increase of over 12% on Q3 2012 and an increase of over 38.8% on Q2 2013 – albeit coming from a relatively low base.

The key home purchaser segments of the market – First-Time Buyers and Mover-Purchasers –

– continued to dominate the market accounting for 86% of new mortgages issued.  Together they now account for over 90% (91.6%) of new mortgages issued in value terms.

Commenting on the latest data, Noel Brett, IBF Chief Executive, stated:

“IBF welcomes the increase in the number of new mortgages drawn down by borrowers as seen in the Q3 figures.  Banks are well positioned to lend to customers who meet the criteria for a mortgage. Today’s figures are a positive indicator of renewed borrower confidence and activity in the mortgage market.  We will be looking closely at both mortgage approvals and drawdown activity over the final quarter of the year for on-going signs of market strengthening; and it remains to be seen how such factors as supply shortage and rising prices in certain locations will impact on the trend.  These mortgage drawdown figures are indicative of the emergence of the new shape of Irish banking built on sustainable, fully-functioning and profitable banks.  Achieving this will be challenging as we rebuild a banking sector which can play its optimum role in Ireland’s economic development post Troika.”

The IBF/PwC Mortgage Market Profile report can be viewed here.

Note: The Irish Banking Federation (IBF) is the principal voice of the banking and financial services sector in Ireland, representing over 70 member institutions and associates, including licensed domestic and foreign banks and institutions operating in the financial marketplace here.

Contact: Jillian Heffernan, Marketing Communications Manager, IBF, Ph: 01 4748835 / 087 9016880

Deputy Director of Monetary and Capital Markets Department, IMF, Addresses FIBI Annual Lunch

The Federation of International Banks in Ireland (FIBI) held its annual lunch today in the Westin Hotel, Dublin. Ireland is the world’s sixth largest exporter of financial services, and the financial services sector accounts for over 40% of all foreign direct investment into the country and contributes around 11% of gross value added in the economy.

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Eamonn Tuohy, Chairman, FIBI, Jan Brockmeijer, Deputy Director, Monetary & Capital Markets Department, IMF, and Noel Brett, CEO, IBF, pictured at the FIBI Annual Lunch 2013

Speaking at today’s event, Jan Brockmeijer, Deputy Director of Monetary and Capital Markets Department at the IMF highlighted the improving economic conditions as well as the challenges which lie ahead as Ireland continues its recovery “I am very conscious of the very difficult circumstances that have faced this country and its financial sector in recent years.  I am very pleased to note that there is now a clearly discernible glimmer of light appearing at the end of that long dark tunnel.  As Ireland and its financial sector continue their recovery, the focus will gradually start shifting from the specific domestic challenges that you have been facing to the international setting.”

Mr Brockmeijer said “Economic conditions in Europe seem to be finally improving. Full commitment to performing a thorough asset quality review and stress test, the establishment of the single supervisory mechanism at the ECB, and the goal of a full banking union hold the prospect of better things to come for Europe and of course for Ireland.”

Also speaking at today’s event, FIBI Chairman, Eamonn Tuohy, said “We are seeing signs of growing confidence among our FIBI members involved in client-driven business, investment services and those providing services within larger banking organisations.  We remain more committed than ever to working with the Government, the Central Bank, IDA Ireland and other key stakeholders to promote an environment that is conducive to good business, one that is both supportive of existing operations here and attractive to new businesses.  For example, a robust regulatory framework is critically important, but it is also important that the system delivers operational effectiveness, proportionality and consistency of application at every turn.  With the appropriately supportive policy and regulatory framework, we believe Ireland is well placed to benefit from further development of international financial services