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.
(Click to enlarge)
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.
NAMA Wine Lake 
Re: NIB statement that people are deliberately not paying their mortgages.
Isn’t it interesting that if Joe Blogs Ltd. goes into liquidation NIB does not suggest that it is done to dodge the creditors, but if Joe Blogs citizen does not pay his mortgage he is in some way working the system. This suggestion has also been also been made by Minister Noonan. The underlying premise that ordinary folk are less ethical than our monied elite is laughable.
The real issue here, as evidenced by the 3 year bankruptcy proposal, is that the little folk might be allowed to use the system in the same way as the elite have used it to their advantage for years.
I bet the usual suspects like Jim Power and Austin Hughes and Marian Finucane will all claim we are over the worst of it.
Are contractual payment holidays counted or not, we never found out. EG many banks allowed a 3-6 month ‘payment holiday’ in the mortgage contract. Many of those in arrears were ‘given’ that after they missed a payment at some stage.
Thing is you only get one payment holiday …normally.
What is noticeable is that the number of mortgages overall is declining.
794,000 mortgages in Sept 2009 is a lot higher than the September 2011 mortgage figure (773,000).
The number of new mortgages have been outpaced by the number of mortages being paid off?
Or more likely it is the case that our zombie Irish banks are simply not issuing new mortgages.
In terms of the mortgage arrears, it would be interesting to see figures for arrears for mortgages greater than 30 days.
Are there separate figures published for arrears on buy to let / holiday home mortgages
@CH, thanks for your comments. You make the important point that these mortgage statistics relate to principal private residences only and specifically exclude holiday homes and buy to let mortgages. I am presently pestering the good people in the Central Bank for a full definition of what these mortgages represent. They are supposed to be mortgage accounts but that might not be the same as households eg two mortgages on a home. The Central Bank of Ireland is publishing a study paper today on the mortgage market in the 2000s and there might be better clarity there as to what a “mortgage account” exactly is.
The Central Bank informed the Finance committee that, at end June 2011, some 46,634 mortgages were in arrears of less than 90 days.
@NWL
I think it would be interesting to include all the additional property which is not generating a mortgage payment in the overall statistics. Technically, they are in default even though not in foreclosure. If my memory serves, you have stated that about 30% of NAMA property does not generate any cash flow at all, much less enough to cover the mortgage/loan payments. As an aside, the Spanish press reported today that their banks own 30 billion euros of “unsaleable” property. That is, in Spanish, “invendibles”. I think we will soon find that the Spanish situation is much more dire than the general public knows.
@Jake, NAMA’s completed residential portfolio in Ireland is large (in the 10,000 region) but I don’t think it will materially affect what are already pretty horrendous numbers.
Couldn’t agree more on the Spanish economy and banking sector. Spain had a bubble in the 2000s which was very similar to Ireland’s yet their official house price indices are down 20% from peak compared to an average of 44% in Ireland, 44% in Northern Ireland. You might be interested in this previous feature blogpost on Spain, the Spanish economy and property bubble and the mystery as to why its bond prices were relatively low.
https://namawinelake.wordpress.com/2011/06/18/spain%E2%80%99s-cost-of-borrowing-from-the-markets-is-now-more-than-the-portugese-bailout-rate-have-we-finally-reached-the-citadel/
Off-topic.
Does anybody else have a problem opening Central Bank pages on their press release section?
I always get a “This page could not be displayed”
@Rob S, no problem here at all. Seperately there were some problems experienced by the blog’s audience yesterday when downloading the NAMA report and accounts. It might be down to security settings on your device.
I am starting to think it is our servers here as it happens regularly and not just me. Not sure why the CB press releases section is annyoing our settings.
Thanks.
The Central Bank link on this page worked fine for me.
@NWL, have you full clarity on contractual ‘payment holiday’ ‘stats’ too as well as BTL and Holiday home purchases ??
Do these figures include Top Ups which could themselves be in arrears while the ‘Principal’ Amount PRE TOP UP is ‘performing and therefore not in arrears ???
Some topups are a full second mortgage in addition to the first, some are conactenated into the principal ….especially after 7 years when the tax reliefs expire ….and they only apply to the first mortgage. Are arrears caused by non performin topups concatenating into primary mortgages after 7 years are up…if so how many??/
The growth in 180day + over 90 day+ may hint at Payment Holidays being reclassified as defaults afte r6 months…when the banks can no longer claim it as a payment holiday…not even retroactively.
If teh CB are being shifty you may be sure they are hiding something, anyways there is a good blogpiece in clarifying all of that :)
@links all working,quite astounding what with the level of negative equity.
Bondholders etc must be comforted by the relatively low level of arrears.
Various ministers and spokespeople take some bizarre pride in proclaiming that Ireland pays all its debts,implying some shame and stigma if you were not too.
@JG, as you once said — wrong forum…but I could fill pages. Isn’t it amazing how differently the idea of getting out of a bad deal is viewed in various countries.
It’s not painless here, but at least it is encouraged that you get yourself out of a bad deal, move on, save and spend once more. But to just slosh around in the mud, while it actually gets deeper. Craziness.
According to Reuters it’s not only homeowners who are feeling the “stress”.
The assumptions underlining the recap. of the banks,looks overly optimistic.
http://www.reuters.com/article/2011/11/18/ireland-arrears-idUSL5E7MI22T20111118
It will be more like 16.7% of the Mortgage Book that never gets paid vack before this finishes.
The only truism about stress tests is that they get progressively more stressful as time goes on.
A lot will depend on the German sorry Irish budget,but with 10% already in arrears mid teens not unrealistic,6.7% definitely will be breached.
@sf images of the famine with carts full of possessions and evictions must have scarred the Irish physce.
There is absolutely no shame, social embarrassment, regret or stigma in puking back the keys to any lender.They took the risk too!
In the US many many successful prosperous people have been in out of BK or Chapter 11.
Right on,
also, the whole regeneration, rebirth,new start thing can be powerful and that too is lost.
The “cost” in human misery,martial breakdown,substance abuse,disengagement with society all caused by suffocating and currently inexcaple debt is imesurable.Numerous friends and associates have filled BK there is no SHAME in it.
sf completly agree Cali and SF is a favorite” born again” location for many people post BK or and rightly so.
@jg re SF.
When the earth beneath your feet rumbles loudly every few months, it reminds you to look ahead, not back. Wild West, Biotech bay, Silicon valley,Forest, certainly the hub of the Universe, and loan forgiveness too.
@sf 49’s on a roll too,but the levels of negative equity coupled with the just released mortgage arrears my force the governments hand.Caught Frontline,14th Nov. on RTE player recently,and many of the audience members,specifically a spokesman from New Beginnings,were off the opinion that the banks were resisting and holding up changes to bankruptcy laws.
Have they not done enough damage to the country!
SF the segment of society that requires immediate help were victims of what we call ‘predatory lending’ they were bombarded with advice to climb on the ladder to instant wealth and ‘happiness’,more like the slipper slope to penury.
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Say it loud say it eh……
“Ich bin ein Berliner”
@John, “Ich bin ein Berlinem” – “Berliner” is a sort of German fruit cake.
It’s how JFK pronounced it….as he said it.
Its actual translation is much debated !
Fruit cake not far off.
I am a Jelly Donout..
http://urbanlegends.about.com/cs/historical/a/jfk_berliner.htm
@ john gallaher
We’re all German now!
http://www.japlandic.com/2011/11/irish-bundestag.html
You may want to have a word with Timmy The Tax Cheat about that American acceptance of failure thing:
https://namawinelake.wordpress.com/2011/06/13/there%E2%80%99s-no-mystery-to-us-treasury-secretary-timothy-geithner%E2%80%99s-intervention-in-the-irish-bailout-wikileaks-has-already-revealed-the-reason/
@wgu the journalist here is is basically outlining “Timmy’s” position.
Linked it before but there is a Fed view that after stepping up at AIG…
http://www.nytimes.com/2011/10/23/business/dexias-collapse-in-europe-points-to-global-risks.html?pagewanted=2&ref=gretchenmorgenson
auf Wiedersehen Edouard Hempel !
@NWL
Central Bank has tried to head you off at the pass
http://www.irishtimes.com/newspaper/finance/2011/1119/1224307821516.html
“ALMOST 100,000 of the State’s mortgages are in arrears or have been restructured, according to Central Bank data.”
c.100k out of 770k is over 12% …innit.
I wonder what the Central Bank mean when they refer to mortgages being “restructured”?
Does restructured mean debt forgiveness? Partial debt forgiveness? Yesterday Karl Deeter on Newstalk said that there is anecdotal evidence to suggest that the number of “won’t repay” – as opposed to “can’t repay” – mortgage holders might well be increasing. If this is the case, then this mess will get worse before it gets better.
Not that the banks will tell us what the actual situation is.
@gerhard dengler: The actual situation is that they are doing whatever deal they can on an individual basis, including receiving “jingle mail”. The problem that they have is that the issue is too big – too many people have stopped paying and they cannot cope.
Mortgagors now realise that they, the borrower, have the upper hand and the banks are unable to separate the “can’t pay” from the “won’t pay” and let’s face it – they are right. The evidence supports the conclusion that bankers are not the brightest bulbs on the Christmas Tree.
@NWL clarification on above postings,they were probably a bit ‘yank’ and esoteric,but I liked the fruit cake comment,will provide ‘links’ going forward.
With the ‘news’ yesterday over the German/Irish budget the ‘famous’ speech from JFK sprang to mind… “Ich bin Berliner” (“I am a citizen of Berlin”).
‘Laying decades of misinformation to rest, linguist Jürgen Eichhoff offered a concise grammatical analysis of Kennedy’s statement in the academic journal Monatshefte in 1993. “‘Ich bin ein Berliner’ is not only correct,” Eichhoff concluded, “but the one and only correct way of expressing in German what the President intended to say.”
An actual Berliner would say, in proper German, “Ich bin Berliner.” But that wouldn’t have been the correct phrase for Kennedy to use. The indefinite article “ein” is required, Eichhoff explains, to express a metaphorical identification between subject and predicate. Otherwise, the speaker could be taken to say he is literally a citizen of Berlin.’
same link above.
The Germans are very precise,its important going forward to master the nuances.
The other posting is a ‘dig’ reminding them who their friends were,when they were pariahs,referencing Dev dropping by Edouard’s gaff…
And you would be correct in asking what the hell has this to do with NAMA,but some RE people read the odd book too,the news yesterday was bit much.
‘Hempel’s time in Ireland is particularly noted for the incident at the end of his term of office when the Taoiseach, Éamon de Valera and Joe Walshe, Secretary of the Department of External Affairs, paid a visit to his home in Dún Laoghaire on 2 May 1945 to express their official condolences ….’
‘In a ‘Documents on Irish Foreign Policy 1941-1945′ a letter from de Valera is quoted defending his contentious visit to Hempel …
He wrote,”So long as we retained our diplomatic relations with Germany, to have failed to call upon the German representative would have been an act of unpardonable discourtesy to the German nation and to Dr Hempel,” he said in a letter.
DeValera granted Hempel asylum at the end of the war. He returned to Germany in 1949.’
Lets hope our new ‘partners’ remember our courtesy,which created significant diplomatic issues for Ireland and has not been viewed kindly by historians.
http://en.wikipedia.org/wiki/Eduard_Hempel
On the subject of Ireland’s new masters, the most appropriate European Super Union would be Germany and Russia. They match up very well, sort of like China and Australia. And, since Merkle commands native Russian language skills, all the easier.
@Jake Watts
+1
At this stage there must be a lot of Europeans wondering just how ‘European’ the former Russian satellite reared, Russian satellite educated, Russian speaking, Dr Merkel really is.