This morning the Central Bank of Ireland released its mortgage arrears and repossession statistics for the quarter ending 31st December 2011. The figures show a progressively worse deterioration in arrears. The Q4,2011 figures are shown below along with the historical series since Q3,2009 when the series was first created.
Of the 768,917 mortgage accounts in the State, 70,911 (9.22%) are in arrears of more than 90 days and of these, 53,086 mortgage accounts are in arrears for more than 180 days, equal to six months. With six months plus of arrears, accounts have a high probability of defaulting.
In addition to the above figures, which are appalling, 36,987 mortgage accounts have been restructured and are performing. In half these cases, the restructure is so as to repay interest only. Other restructured formats include repayment holidays, or reduced capital repayments.
In other words, 107,708 mortgage accounts are now either in 90-day-plus arrears or are not being repaid according to the original loan agreement. That’s one in seven mortgage accounts.
The above statistics, in addition to being personal nightmares for the families and borrowers involved, are a nightmare for the economy depressing demand, threatening bank balance sheets and possibly indicating a wave of repossessions which will undermine property prices further. Banks are suggesting the Government’s dithering on personal insolvency arrangements – the latest is the heads of a bill have been published, and the final bill is to be published in April 2012 and it will be enacted some time after that, but it may be some months. There are a code for dealing with mortgage arrears which presently just appears to be kicking the problem down the road.
Here is a comparison between Ireland and the UK, showing that Ireland suffers far more from arrears but far less with repossessions. With our negative equity and unemployment, the writing appears to be on the wall for a major adjustment in how arrears are dealt with. Banks are already complaining that borrowers are strategically not paying mortgages in order to take advantage of any imminent bankruptcy legislation.