It will be Friday this week when our own Financial Regulator, Matthew Elderfield publishes the mortgage arrears data for the second quarter of 2012. Sadly on this occasion, the data will again be confined to owner occupier mortgages, but it is hoped that in November 2012, we will start to get data on Buy-to-Let mortgages as well. This is what the historical data looks like:
As usual, the Financial Regulator will provide home repossession data on Friday as well, but it is unlikely that there will be much change to the miniscule number of repossessions that take place in (the Republic of) Ireland. Since 2009, there have been about 500-600 repossessions per year, and there has been little absolute change in the last three years, to quarterly statistics despite the intensifying crisis of unemployment, reductions in take-home pay and collapsing property values.
Contrast this with our neighbours over the Border who on Friday last published repossession data from its courts system for Q2,2012. The figures show that between April and June 2012, there were 713 repossession orders granted by the Northern Ireland courts, of which 205 were suspended and 6 were “suspended possession combined”
Northern Ireland is a jurisdiction with a 7.6% unemployment rate compared with 14.8% on this side of the Border. Their residential property has declined by about 50% since the peak in 2007, about the same collapse as our own, though with higher inflation across the UK than in Ireland, the real collapse in Northern Ireland has been slightly worse than our own. And remember in Northern Ireland, they don’t have a problem with vacant housing that we do here (see bottom of table below).
So on a pro-rata house basis – and taking account of immediate possession orders only – the repossession rate in Northern Ireland is 8 times greater than in the Republic. Taking account of all repossession orders, actual and suspended, the repossession rate is 11 times that of the Republic. These comparative results are based on total number of dwellings in both jurisdictions – we don’t have mortgage statistics for Northern Ireland, in the Republic there are about 764,000 mortgages.
An unpleasant but inevitable consequence of adopting a UK model for personal insolvency would be an increase in repossessions, and in this country we have a troubled history with eviction and dispossession under occupation. But as a society and economy, we need to ask ourselves if it is better to leave people in property which they cannot afford but under austere conditions which blight their lives and their contribution to the economy or to release them to get on with their lives in a humane way but which may mean the repossession of their home. Supporters of a UK-style insolvency/bankruptcy model will need confront these unpleasant consequences.
@NWL, What is needed is not repossession, but a bank write-down of loan amounts to sustainable levels that the mortgagors can afford and that reflects the current value of the properties.
From any independent viewpoint, there is nothing to be gained by eviction. The bank is still left with a property at the current valuation, except that it now has to incur the expenses relating to a resale. It would be far better off reducing the price level and restructuring its loan to the current occupant.
Agreed and we as taxpayers have funded the banks to do this. The sooner this is done the quicker the economy will stabilise and recover.
@WSTT, remember that the intersection of those in mortgage arrears and those in negative equity is not huge, most people in negative equity continue to pay their mortgages on time in accordance with the agreement.
We don’t need reinvent the wheel in Ireland, we just need a quick, efficient, time-tested bankruptcy system whereby a borrower’s assets are given up to the lender, where the borrower goes on basic rations for a period and where the debt is ultimately written off and where the borrower keeps their employment.
In most places, not paying anymore, default, whether calculated or just plain inevitable, is the start of a process. A necessary process to which you are entitled.
In Ireland,not paying anymore, is a crime.
That may not be technically correct,(probably is) but thats the way it works right now.
That unique and momenetus decision, ‘I’m not paying anymore’ especially for a hopelessly (50%+ ) underwater mortgage, is often a step forward for a person, except, again, in Ireland, where it is perceived as a step toward jail.
Ireland: Throw good money into a black hole, or go to jail. Craziness.
There was a time “jingle mail” was sneered at as a unique American affliction, that was around the same time Irish parents wanted a banker in the family, and a teacher, maybe a nurse…
Why is it that home reposessions have been so low in Ireland? Apparently Spain, which by all accounts had a property boom/bust much like our own, saw over 200 evictions per day in 2011, arising from mortgage non-payment. Is the answer to do with mortgage law or is there a political dimension to the way the banks have decided to act on this issue??
Incidently, the Spanish anti-eviction campaign group the Mortgage Holders Platform are collecting signatures at the moment to have their legislative proposal brought before parliament. The proposal includes provisions for ‘dacion en pago’, whereby outstanding mortgage debt is cancelled upon handover of the keys, and for the creation of social housing using Spain’s empty housing (around 7 million units I think).
I wrote a little article on that group that some might be interested in, you can download it here: http://provisionaluniversity.files.wordpress.com/2012/09/the-pah-and-the-right-to-housing.pdf
This is a pretty decent summary,basically a legal situation.
“Before December 2009, lenders used a 1964 law as the basis to repossess homes. This was repealed and replaced in 2009, which due to a drafting oversight, applied only to loans taken out after Dec. 1 2009.”
http://mobile.businessweek.com/news/2012-08-19/irish-bailout-masters-press-for-rental-home-seizures-mortgages
Thanks a mil John. So it’s just a technical problem? Seems strange that they haven’t managed to sort that out, perhaps the last think the government want is the proposect of nationalised banks evicting people from their homes?
@provisionaluniversity,great paper mobile have not had chance to read it properly.
That’s a very interesting question,the AG is labour perhaps she lost the file behind a radiator!
Expect it to get fixed,specifically relating to ‘buy to rent’ or investment properties.