Press Release 18 November 2011
The Central Bank of Ireland today publishes new economic research on 
“The Distribution of Property Level Mortgage Arrears”. The research analyses the position of mortgaged households in the areas of arrears and negative equity.
The analysis in the paper draws on loan-level data collected for the March 2011 Financial Measures Programme Report. This data records the arrears position of each of the loans in the four institutions’[i] books as at end-2010. The equity position of each household is updated to September 2011, using the CSO house price index. The research uses data on over 600,000 loans, totalling €87 billion of outstanding debt, €67 billion of which is owner-occupier and €20 billion of which is buy-to-let.
The key findings of the research, which analyses over 600,000 loans and €87 billion of outstanding mortgage debt, are as follows:
- As at end-2010, 56% of mortgages in arrears over 90-days were in the four institutions covered by the Financial Measures Program.
- The remaining 44% was split between other mortgage lenders (35%) and sub-prime lenders (9%). Sub-prime lenders account for less than 2% of all lending.
- Around one-in-four owner-occupier borrowers have more than one loan secured against their property.
- Two-thirds of owner-occupier mortgaged households have an outstanding debt of less than €200,000. Another 30% have debts of between €200,000 and €500,000. The remainder, less than 4%, have an outstanding debt over €500,000.
- Using the CSO’s September 2011 house prices index, it is estimated that 34% of owner-occupier households with mortgages in these institutions are in negative equity. The bulk of these took out loans between 2005 and 2008, with 51% of these borrowers are in negative equity.
- Despite the widespread negative equity amongst borrowers, particularly for those who purchased properties between 2005 and 2008 (one-third of loans), the vast majority of negative equity borrowers, over 90%, were not in arrears at the end of 2010.
- The average negative equity of borrower without arrears is €67,768; by contrast borrowers who are also in arrears have a higher negative equity average of €83,911.
- Of those borrowers in arrears over 90-days, it is estimated that around 38% have at least 20% equity in their homes, that is, a loan-to-value ratio of less than or equal to 80%.
- Of those households in arrears over 90-days arrears, some 40% have been in this position for a year or more. The average amount of arrears on these loans is €27,000. The average outstanding balance on these loans is just over €200,000.
- 22%, or €20 billion out of €87 billion, of the total loan book analysed relates to buy-to-let property debt. 51% of buy-to-let properties are in negative equity, with an average outstanding balance for this group of €320,000. The average negative equity is just over €100,000.Within the four institutions covered by the Financial Measures Program, 33% of buy-to-let borrowers also have an owner-occupier mortgage with the same lender.
[i] (AIB, BoI, EBS and IL&P)