Mortgage arrears level set to peak

The level of mortgage arrears of over 90 days will peak in 2014, having reached a new high of 18% in the final quarter of last year, according to Fitch Ratings.

However, in a report called ‘Mortgage Market Index — Ireland’, Fitch said the number of borrowers entering early stage arrears has fallen to 2.2% from its peak of almost 3% in 2011. It noted that various schemes have been introduced to tackle cases of long -term arrears, including reinstating foreclosure as a viable option for lenders. As a result, Fitch expects the level of three-months-plus arrears to peak in 2014.

“There has been a slowdown in the number of new borrowers getting into mortgage distress,” says Andrew Currie, managing director at Fitch’s Structured Finance team. “Recent legislative changes provide lenders with more certainty that they have effective tools to handle the most uncooperative borrowers. The combination of fewer new arrears cases and our expectation of a slow pick-up in loan workouts means the peak in late-stage arrears is now close.”