Almost 14% of mortgages in arrears, house prices due to drop 20%: Moody's

Ratings agency Moody's has said Ireland's rate of mortgage arrears could be as high as 13.99%, and that house prices will fall by a further 20%.

Last month, the Central Bank said that 10% of mortgages were in arrears.

However, Moody's said today that this figure is already out of date and that 100,000 mortgage holders are now behind in their payments.

13.99% of mortgages are three months behind in their payments (from 11.98% in January) and 4.23% are in default.

Spain says just 3% of their loans are in arrears, but Spanish homeowners are only judged to be in arrears if they have not paid their mortgage in a year. In Ireland, failure to pay for three months is judged as being in arrears.

In a statement this morning. Moody's said that the house price fall of 49.9% between September 2007 and April 2012 had "placed the majority of borrowers deep into negative equity".

The agency said it expected prices to fall by a further 20%, and that the combined 60% fall from peak prices would "increase the severity of losses on defaulted mortgages".