This morning Ireland’s Financial Regulator, a function and office which is part of, and reports to, the Central Bank of Ireland published its residential mortgage arrears data for Q3, 2011. The press release is here, the data is here and historical data to Q3, 2009 when the series was first created is here. Here’s the summary.
The figures show a deterioration in the arrears position and that the pace of increase in arrears is picking up – more mortgage accounts went into arrears in Q3,2011 than in any other quarter since records began; which was only in Q3,2009 by the way, and we can probably thank our current Financial Regulator who took up the role in January 2011, Matthew Elderfield for starting to collect and publish this vital data.
The figures show that there were 773,240 mortgage accounts at the end of Q3, 2011 down 0.5% from the previous quarter and down 15,000 from a year ago. 16,599 accounts were in arrears between 90-180 days which is up nearly 1,000 on the previous quarter. However 46,371 accounts were in arrears 180+ days and the betting is that most of these will default. This is up over 6,000 from the previous quarter. 8.1% of all mortgage accounts in Ireland are now in arrears of at least 90 days. Repossessions remain muted at 162 in the quarter (including voluntary handbacks). Ireland’s failure to confront its mortgage crisis is illustrated in this comparison with our neighbours in the UK.
When these figures are published, there is now a tradition of some commentator or other pointing out that although the figures in arrears is worrying, we shouldn’t forget that 90%+ of mortgage accounts are being repaid without incident in accordance with the terms of the loan. This viewpoint is to my mind akin to saying that we only had 11 homicides in Q3,2011 in Ireland and the vast majority of the 4.6m in the State wasn’t murdered, that there were 28 Tiger Kidnap offences but again 4.6m people weren’t kidnapped or that 630 people were sexually assaulted but most weren’t. There is a reason we concentrate on mortgage arrears, and on a human level it is because most represent difficult and worrying conditions for those affected and we don’t want a society where a large proportion of people face losing their homes. Economically it means those affected are unlikely to be spending in the economy and they are a drag on banks, which in turn affects credit availability in the economy.
Lastly I note from National Irish Bank’s recent management statement and interim accounts for Q3, 2011 that there is a view on the part of banks that the dithering by Government in deciding how to deal with mortgage arrears specifically and debt generally is making the situation worse. The suggestion is that some might be deliberately not paying their mortgages because of the prospect of debt forgiveness which mightn’t be made available if they keep their loan repayments up to date. Government needs to get a move-on and deliver personal insolvency legislation.