Early-stage mortgage arrears have fallen below 2% for the first time in three-and-a-half years, according to ratings agency Fitch.
The data shows that the burgeoning economic recovery is helping homeowners one or two months behind on their payments to claw their way out of mortgage arrears.
The Fitch RMBS Compare report warns, however, that the disparity between the best and worst performing mortgage portfolios has never been greater as the improving situation has failed to lift all loans.
Commenting on the figures, Fitch structured finance team managing director Andrew Currie said: “The improved macro-economic environment is feeding through to the mortgage market as fewer borrowers are facing financial difficulty.
“Fitch’s latest arrears index highlights the polarisation in the market; generally even the late-stage arrears rates have plateaued or are falling, but portfolios with concentrations of loans with weaker features continue to deteriorate.”
Latest Central Bank figures released in September show that the number of primary dwelling mortgages in arrears fell 4.7% in the second quarter of the year but that the number of those in arrears of two years or more rose 5%.
Buy-to-let mortgage accounts in arrears of over 90 days also rose in the second quarter of the year; up 2.3% on the previous quarter.
Fitch’s figures highlight a general improvement in early stage arrears across many European countries as macro-economic conditions stabilised or improved, only Greece is still showing significant home price declines, the report found.
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