Mortgages losses to exceed stress tests

Mortgages losses among the covered Irish banks are likely to exceed the adverse scenario outlined in last year’s government stress tests by €1bn-€2.5bn, with risks that there could be further losses looming if more radical measures are not taken to deal with mortgages arrears, according to a report into the Irish mortgage market by Davy Stockbrokers.

In Mar 2011, the Irish Central Bank commissioned Blackrock International to conduct a comprehensive stress test of the Irish-covered banks.

According to the adverse case scenario — based on 59% peak-to-trough fall in house prices and unemployment reaching 16% — mortgage losses would reach €9bn.