Irish mortgage arrears double

THE percentage of the €1.4 billion worth of Irish residential mortgages in arrears for more than 90 days has doubled to 1.5%.

Ratings agency Standard & Poor’s said almost 4% of Irish mortgages are now in arrears or delinquent for more than 30 days – double the level a year ago.

It said higher unemployment and continued house price declines are likely to put further pressure on the performance of Irish mortgage-backed securities.

The rate of delinquent mortgages here is now higher than in Britain.

While loans in arrears are increasing, home repossessions are “relatively low”, Standard & Poor’s said.

“This could be due to a number of factors; we understand that the legal system, for example, is generally considered to be ‘borrower-friendly’,” Standard & Poor’s analyst Kate Livesey said.

The agency said recent trends in mortgage lending, which is down almost 10% in the year to April, reflect the dire market conditions.

It anticipates that house prices in Ireland will fall by 13% this year and 10% in 2010.

Based on this improved affordability in the housing market, S&P said the current downturn could end in the next year or so.

“However, other variables, such as the absolute level of household debt, also need to be taken into account. There is likely to be a period of deleveraging as borrowers try to reduce their debt, and interest in the housing market is likely to remain stagnant,” it said.

The agency’s report covered residential mortgage backed securities (RMBS).

Irish-based banks have issued €37 billion of these securities in recent years.