Vulture funds strengthen grip on Irish mortgages in arrears, Central Bank figures show
Almost 47,000 accounts were in arrears in December, the Central Bank said.
Vulture funds and their agents have strengthened their grip in Ireland by gaining more control of residential mortgages that have been in some sort of arrears for more than a year, new Central Bank figures show.
In the final quarter of last year, these non-bank entities controlled 77% of all residential mortgages in long-term arrears, a 3% rise on the previous quarter.
In the final quarter of 2022, the number of homeowners falling into short-term arrears rose sharply.
The level of mortgage holders in short-term arrears rose to 2,326, representing the first spike in more than a decade.
In contrast however, the number of mortgage accounts in long-term arrears, or more than one year behind on their payments, declined.
Almost 47,000 accounts were in arrears in December, the Central Bank said.
The latest residential arrears and repossession statistics also showed that the number of home mortgages that have been in arrears for over 10 years, at 5,526, remains high but has fallen from 5,874 in Q3.
The Central Bank said that 88% of mortgage holders, whose loans had been subject to a restructuring deal to help them continue to service their loans, met their agreed monthly repayments. This is a slight drop on the previous quarter.
Mortgage customers are battling ongoing headwinds including interest rates rises introduced by monetary policymakers to battle inflation.
The European Central Bank (ECB) has increased interest rates by a total of 3.5% since last summer.
There are more than 700,000 residential mortgages in Ireland and around 200,000 of these are tracker customers which are the most exposed to the interest rate hikes enforced by the ECB.
"Tracker rates will probably never be as valuable as they have been to date as it is unlikely that the ECB will keep its rate low for a prolonged period again," said broker and managing director of MortgageLine Stephen Hamilton.
On Friday morning, Bank of Ireland said it will hike interest rates for its fixed rate mortgage products by 0.5%.
The hike will impact the bank’s fixed-rate mortgages for new and existing customers.
This includes customers who are coming to the end of their fixed rate period and are seeking to re-fix their mortgage, and tracker rate or variable rate customers who wish to move to a fixed rate.
The rate increase means a first-time buyer on a mortgage of €300,000 over 25 will pay an extra €78 per month or €936 per year, said Mr Hamilton.
Mr Hamilton recommended that anyone on a tracker mortgage should contact their existing mortgage lender to see what their options are if they are worried about further increases.
“You will not make savings, in the short term, but you may be able to insulate yourself from further increases by fixing,” he said.
This is the second time Bank of Ireland has raised rates this year and the third time overall since the ECB hawks introduced rate hikes.
“I think the majority of the rate increases are behind us albeit with some more increases to come,” said Mr Hamilton.
