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
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