Mortgage crisis deepening as pace of mortgage arrears starts to pick up again

[CORRECTION: This morning’s release of arrears and repossession data from the Central Bank contained a footnote which referred to changes to previous quarters’ data due to “reclassification”. The footnote was overlooked on here and the figures below have now been updated to reflect the previous quarters’ data published by the CBI. The adjustments extended to overall mortgage numbers, and it would be interesting to see how that “reclassification” came about. The original release for Q2,2012 is here.

The blog has also received the latest figures from the UK’s Council of Mortgage Lenders – arrears are in this Excel spreadsheet and repossessions are in this Excel spreadsheet. The latest annual numbers are little changed to previous numbers.

The reclassified figures from the Central Bank show that the pace of increase in mortgage arrears over 90 days have decreased slightly. In Q2, 2012 the increase from Q1, 2012 was 7.1% whereas the increase from Q2, 2012 to Q3,2012 is slightly less at 6.3%. In Q2,2012 an extra 5,356 mortgage accounts fell into arrears of over 90 days and that reduced very slightly to an extra 5,111 mortgage accounts in arrears in Q3,2012.

The revised figures show that the number of mortgage accounts did fall in Q3,2012 by 3,000. This followed a revised increase in mortgage accounts in Q2,2012 of 1,000 which was the first increase since records began in Q3,2009.

Contrary to what the Irish Bank Federation claims in its press release today, the number of sub-90 days arrears accounts has actually increased from 47,162 in Q2,2012 to 49,482 in Q3,2012. The IBF says there has been an “underlying decline” which is wrong.

Overall, the figures today show that all accounts in arrears are up 7,431 in Q3,2012 compared with an increase of 5,256 in Q2,2012 and on both an absolute and relative basis, the pace of deterioration has increased.

Here are the revised figures – click to ENLARGE

Here are the revised Ireland and UK figures

]

[NOTICE: The Central Bank has this morning published Q3,2012 data but it has also adjusted previous quarters’ data and this is now being checked with the Bank. For example, the Q2,2012 press release from the Bank is here, but this morning’s data shows significantly different data for Q2,2012]

This morning, the Central Bank of Ireland has published its quarterly series of arrears and repossession statistics for both owner-occupied homes and for the first time, Buy to Let mortgages. The figures are available not available from the Central Bank’s website yet, but the Irish Times seems to have had an advance copy to prepare this report. Below is the historical position on owner-occupier mortgage accounts – click to ENLARGE.

The above shows that the slowing down in the rate of new arrears has reversed and mortgage arrears are now growing at their fastest rate since the end of 2011. The only positive detail is the number of mortgage accounts has increased for the first time since records began in Q3,2009.

In addition to arrears over 90 days, some 43,742 accounts have been “restructured” – these may be paying interest only or smaller-than-contracted sums or in some cases, may not be repaying anything whatsoever.

Today’s figures show that 17% of owner-occupier mortgage accounts are in arrears over 90 days or have been restructured. Some 17,000 homes in Ireland also receive welfare payments in the form of mortgage interest supplement. It is not clear if any of these payments are to mortgage accounts that are in arrears or restructured. A further 49,482 mortgage accounts were in arrears of less than 90 days at the end of September 2012, but such arrears can oftentimes be cleared. But on the face of it, up to 26% of Irish owner-occupier mortgage accounts are in arrears, have been restructured or are in receipt of Government aid.

The figures today show that 154 properties were repossessed in Q3,2012 which is in line with previous months and means that our repossession level remains at a very low level compared to international standards, for example in the US and the UK.

Figures for Buy to Let mortgages today reveal that one in six mortgages is in arrears of more than 90 days. There are 149,592 BTL mortgages, of which 26,779 or 17.9% are in arrears of more than 90 days. There has been a similar rate of deterioration in these accounts since Q2, 2012 as owner occupier accounts.

The contrast between the treatment of mortgages in Ireland and our closest neighbour, the UK, is stark. Not only are arrears per 100,000 accounts more than five times the level of our neighbour  but repossessions per 100,000 accounts is one quarter of our neighbour’s rate. You are 24 times more likely to have your home repossessed in the UK if your mortgage falls into arrears than in Ireland.

There has been little progress with dealing with the mortgage crisis, and it remains to be seen if the Personal Insolvency Bill which should be passed into law before Christmas (2012) will benefit home-owners. It has been over a year since An Taoiseach responded to President Clinton’s speech at the Global Irish Forum in Dublin Castle where Bill Clinton identified the mortgage crisis as the greatest economic challenge facing this State.

UPDATE: 13th December, 2012. The Central Bank has finally published the arrears information which was due at 11am and which was circulated or leaked to media before 11am judging by the lengthy report by Pamela Newenham in the Irish Times at 11.01am.