Central Bank figures show Irish mortgage arrears remains in ‘crisis’

The large number of Irish mortgage arrears still represents a “crisis”, Central Bank figures and new research published yesterday starkly showed, even as the number of people in arrears reduced.

Mortgage accounts in any type of arrears on the main home fell to 92,291 at the end of September, down by 5,864 from the previous quarter. Arrears of over 90 days also fell, to 65,584, and the number of long term arrears — of over 720 days — also fell, for the first time.

There were 37,269 accounts in arrears for over 720 days at the end of September.

People move off the arrears if they either catch up with payments or their mortgage is restructured — such as a switching to an interest only mortgage, or extending the maturity of the loan.

But the Central Bank has confirmed that the number of restructured accounts or those that remain in arrears has reached 182,548.

That number represents 24% of all the residential mortgage accounts in the State. By value, lenders have advanced outstanding mortgages on principal homes of €102.5 billion.

The value of the 65,584 outstanding mortgages in arrears of over 90 days was worth €12.99bn.

Arrears on these mortgages were worth €2.4bn at the end of September.

Experts focus on long-term arrears the most because research suggests that these households are the most vulnerable. Central Bank research published yesterday threw more light on long-term arrears.

Authors Robert Kelly and Fergal McCann said such arrears “represent an area of great policy concern”.

“Loans with higher arrears balances are known to have lower-cure probabilities,” said McCann, while “a large share of long-term non-performing loans on banks’ balance sheets may render the bank a less attractive proposition for investment.”

Their research found that accounts holders in arrears were more likely to have: low income; larger mortgage- debt burdens; to suffer from large mortgage affordability and unemployment shocks — as well as divorce — since first taking out the mortgage loans.

“Long-term mortgage arrears are more prevalent among vulnerable family types such as single borrowers with multiple children,” the report said.

“Finally, housing equity positions are also weaker among borrowers in long-term mortgage arrears, suggesting the extreme shock experienced in the housing market played a role in the arrears crisis.”