Loss of ownership solutions ‘exceptionally high’

The number of mortgage solutions for loans in arrears that involves loss of ownership to the borrower is exceptionally high at almost 50%, according to a leading stockbroking firm.

Davy Stockbrokers yesterday released an evaluation of the Central Bank’s Mortgage Arrears Resolution Targets (Mart, details of which were published on Monday, which points to the large proportion of borrowers losing ownership of their properties as part of a mortgage arrears solution.

The data show that 49,000, or just under 49% of the 100,313 solutions arrived at in Q3, involved loss of ownership, including more than 31,000 owner-occupier mortgages.

“The [Central Bank] data shows that Irish banks are meeting the MART targets, with proposed solutions for 93% of arrears cases in Q3 2014 already exceeding the 85% target for the year-end. However, of the 100,313 solutions, loss of ownership constitutes an exceptionally high percentage– 49,000, or 48.9% of the total,” said Davy chief economist, Conall MacCoille.

The research highlights that uncooperative borrowers are included in the cohort of borrowers that have lost ownership of their property, but adds that these mortgage holders could still re-engage at a late stage.

Buy-to-let (BTL) investors also appear to be moving towards repossession at a faster pace, with 57% of concluded BTL solutions involving loss of ownership compared with just 33% of owner-occupier solutions.

With 29,796 total residential property market transactions in 2013, the total 49,000 delinquent mortgage accounts currently being threatened with repossession represent well over a year’s worth of transactions.

The Central Bank data also indicated considerable success of loan modifications in restoring performance – with 89% of such mortgage loans meeting the terms of their new arrangement.

Many mortgage loans in arrears have still not been offered a modified loan, although this could partly reflect a number of uncooperative borrowers who are not engaging with banks.

The percentage of owner-occupier borrowers in arrears of more than 90 days fell to 11.2% in Q3 2014, according to the Central Bank.