Information release 4 March 2014
View information release with charts and related data tables.
- The number of mortgage accounts for principal dwelling houses (PDH) in arrears, fell for the second consecutive quarter in Q4 2013. A total of 136,564 (17.9 per cent) of accounts were in arrears at end Q4 2013, a decline of 3.3 per cent relative to end-Q3, although the size of the decline was impacted by asset sales over the quarter.
- The number of PDH accounts in early arrears of less than 90 days declined by 5.7 per cent during the fourth quarter, compared to a decrease of 5.5 per cent in Q3.
- PDH mortgage accounts in arrears of over 90 days at end-December 2013 decreased by 2,262 (2.3 per cent) over quarter. This represents the first decline in the number of accounts in arrears over 90 days, since the series began in September 2009.
- However, the decline in the overall number of mortgage accounts in arrears, masks continuing increases in very long-term arrears. While the number of accounts in arrears between 90 and 720 days declined by 4,017 over the quarter, accounts in arrears of over 720 days increased by 1,755.
- At end Q4 2013, there were 33,589 mortgage accounts with arrears of greater than 720 days corresponding to outstanding balances of €6.9 billion. These accounts represented almost 63 per cent of outstanding arrears on PDHs at end-December 2013.
- There was a total stock of 84,053 PDH mortgage accounts classified as restructured at end-December, reflecting a quarter-on-quarter increase of 4.3 per cent. Of these restructured accounts, 79.3 per cent were deemed to be meeting the terms of their current restructure arrangement.
- The largest increases in restructures were recorded for arrears capitalisation and split mortgages, while the largest declines related to interest only arrangements.
- The number of buy-to-let (BTL) mortgage accounts in arrears fell from 40,396 (27.4 per cent) to 39,250 (27 per cent) in the fourth quarter of 2013. However, in line with PDH developments, there were divergent trends between accounts in arrears of less than 720 days and accounts in arrears over 720 days, with the latter continuing to rise.
- There were 12,218 (8.4 per cent) residential mortgage accounts for BTL properties in arrears of over 720 days at end-December 2013, up from 11,597 (7.9 per cent) at end-September 2013. The outstanding balance on these accounts at end-December was €3.9 billion.
Residential Mortgages on Principal Dwelling Houses
At end-December 2013, there were 764,567 private residential mortgage accounts for principal dwellings held in the Republic of Ireland, to a value of €107.4 billion. Of this total stock, 136,564 accounts were in arrears, (a fall of 4,705 over the quarter) and 96,474 (12.6 per cent) were in arrears of more than 90 days. The size of quarter-on-quarter change for Q4 2013 is, however, impacted by asset transfers, but this does not change overall trends. Accounts in arrears of over 90 days were 2,262 lower, when compared to end-September 2013. This marks the first decrease in arrears over 90 days since the series began in September 2009. The outstanding balance on PDH mortgage accounts in arrears of more than 90 days was €18.2 billion at end-December, equivalent to 16.9 per cent of the total outstanding balance on all PDH mortgage accounts.
Early arrears continued to decline during the fourth quarter of the year. There was a quarter-on-quarter fall of 5.7 per cent in the number of accounts in arrears of less than 90 days, which stood at 40,090 at end-December, or 5.2 per cent of the total stock. Longer-term arrears continued to increase, however, as the number of accounts in arrears over 360 days reached 60,422 at end-December, equivalent to 7.9 per cent of the total stock of PDH mortgage accounts. All of this increase was driven by accounts in arrears of over 720 days, which rose by 1,755 and now constitute 24.6 per cent of all accounts in arrears, and 62.6 per cent of arrears outstanding. The pace of increase in longer-term arrears has continued to moderate, however, and, combined with the reduction in early arrears this quarter, resulted in a decline in the overall stock of PDH accounts in arrears of 3.3 per cent relative to Q3 (4.4 per cent decline in value terms). Nonetheless, the value of accounts in longer-term arrears over 360 days remains large, amounting to €12 billion at end-December.
Forbearance techniques include: a switch to an interest only mortgage; a reduction in the payment amount; a temporary deferral of payment; extending the term of the mortgage; and capitalising arrears amounts and related interest. The figures also include some advanced modification options such as split mortgages and trade-down mortgages, which have been introduced recently to provide more long-term solutions for customers in difficulty.
A total stock of 84,053 PDH mortgage accounts were categorised as restructured at end-December 2013. This reflects an increase of 4.3 per cent from the stock of restructured accounts reported at end-September. The share of interest only arrangements of less than one year and reduced payment arrangements fell further during Q4, to 36 per cent from 44 per cent at end Q3 indicating a move out of short-term arrangements. Arrears capitalisations and term extension arrangements increased during the fourth quarter of the year, and accounted for 22 per cent and 19 per cent of total restructures at end-Q4, respectively. A breakdown of restructured mortgages by type is presented in Figure 2. A total of 28,364 new restructure arrangements were agreed during the fourth quarter of the year, reflecting a 19 per cent increase on the number of new arrangements agreed during the third quarter. The data on arrears and restructures indicate that of the total stock of 136,564 PDH accounts that were in arrears at end-December, 38,416 (28.1 per cent) were classified as restructured at that time.
Of the total stock of restructured accounts at end-December, 54.3 per cent were not in arrears. Restructured accounts in arrears include accounts that were in arrears prior to restructuring where the arrears balance has not yet been eliminated, as well as accounts that are in arrears on the current restructuring arrangement. At end-December, 79.3 per cent of restructured PDH accounts were deemed to be meeting the terms of their arrangement. This means that the borrower is, at a minimum, meeting the agreed monthly repayments according to the current restructure arrangement. It is important to note that ‘meeting the terms of the arrangement’ is not a measure of sustainability, as not all restructure types represent longer-term sustainable solutions. For instance, short-term interest only restructures are, in general, not part of longer-term sustainable solutions. However, inability to meet the terms of the arrangement implies that the restructure agreement put in place may not have been suitable. Table 1 shows the percentage of restructured accounts that were deemed to be meeting the terms of their arrangement at end-December 2013, broken down by arrangement type. Lower numbers indicate a higher incidence of ‘re-default’, and these are particularly evident amongst arrears capitalisation cases, as well as cases in which a permanent interest rate reduction has been granted. As the figures in Table 1 only reflect compliance with the terms of the current restructure arrangement, we should expect to see a higher percentage of compliance among the restructure types that are likely to be shorter-term. Nonetheless, the figures imply that of the total stock of accounts in the arrears capitalisation category, 42.1 per cent of PDH accounts have ‘re-defaulted’, i.e. the arrears balance has increased since the arrangement was put in place.
Legal Proceedings and Repossessions
During the fourth quarter of 2013, legal proceedings were issued to enforce the debt/security on a PDH mortgage in 1,491 cases. Court proceedings concluded in 258 cases during the quarter, and in 82 of these cases the Courts granted an order for repossession or sale of the property. There were 1,012 properties in the banks’ possession at the beginning of the quarter. A total of 168 properties were taken into possession by lenders during the quarter, of which 63 were repossessed on foot of a Court Order, while the remaining 105 were voluntarily surrendered or abandoned. During the quarter 166 properties were disposed of. As a result, lenders were in possession of 1,014 PDH properties at end-December 2013.
Residential Mortgages on Buy-to-Let Properties
At end-December 2013, there were 145,530 residential mortgage accounts for buy-to-let properties held in the Republic of Ireland, to a value of €29.7 billion. Some 39,250 (27 per cent) of these accounts were in arrears, compared to 40,396 (27.4 per cent) at the end of the third quarter. Of this total stock of accounts, 30,706, or 21.1 per cent, were in arrears of more than 90 days, reflecting a decrease of 1.5 per cent over the quarter. The outstanding balance on BTL mortgage accounts in arrears of more than 90 days was €8.7 billion at end-December, equivalent to 29.2 per cent of the total outstanding balance on all BTL mortgage accounts.
The number of BTL accounts that were in arrears of more than 180 days was 26,340 at end-December 2013, reflecting a quarter-on-quarter decrease of 1.1 per cent. However, in line with PDH developments, accounts in arrears over 720 days continued to rise. These now total 12,218 accounts or 8.4 per cent of the total stock of BTL mortgage accounts and 65 per cent of outstanding arrears. The outstanding balance on these accounts was €3.9 billion at end-December, equivalent to more than 13 per cent of the total outstanding balance on all BTL mortgage accounts. Consistent with the trends in PDH mortgages, BTL accounts in early arrears fell by 7.3 per cent in the fourth quarter of the year. The number of BTL accounts in arrears of less than 90 days was 8,544 (5.9 per cent of the total stock) at end-December 2013, a fall of 674 over the quarter.
A total stock of 21,777 BTL mortgage accounts were categorised as restructured at end-December 2013, reflecting an increase of 0.8 per cent from the stock of restructured accounts reported at end-September 2013. Of the total stock of restructured accounts recorded at end-December, 60 per cent were not in arrears, while 76.2 per cent were meeting the terms of their restructure arrangement. A total of 6,731 new restructure arrangements were agreed during the fourth quarter of the year. Interest only arrangements of less than one year and reduced payment arrangements continued to account for the majority of restructures in place for BTL mortgages, although their share fell to 44 per cent from 51 per cent at end-September. The data on arrears and restructures indicate that of the total stock of 39,250 BTL accounts that were in arrears at end-December, 8,707 (22.2 per cent) were classified as restructured at that time.
Legal Proceedings and Repossessions
There were 494 BTL properties in the banks’ possession at the beginning of Q4 2013. A total of 69 properties were taken into possession by lenders during the quarter, of which 24 were repossessed on foot of a Court Order, while the remaining 45 were voluntarily surrendered or abandoned. During the quarter 60 properties were disposed of. As a result, lenders were in possession of 503 BTL properties at end-December 2013.
Residential Mortgages issued by Non-Bank Lenders
Non-bank lenders accounted for 2 per cent of the total stock of residential mortgage accounts outstanding at end-December 2013 (2.5 per cent in value terms). A total of 9,050 mortgage accounts issued by these lenders were in arrears of more than 90 days at end-December. The outstanding balance on these accounts was just under €2 billion, equivalent to 55 per cent of the total outstanding balance on all mortgage accounts issued by non-bank lenders.
Note to editors:
The Central Bank of Ireland has produced a number of consumer guides to assist consumers who are in arrears or facing arrears, including
- Mortgage Arrears - A Consumer Guide to Dealing with your Lender;
- Mortgage Arrears - Frequently Asked Questions; and
- Guide to Completing a Standard Financial Statement.
The above guides, that include information on the protections that are available to consumers in financial difficulty, are available to download from the consumer information section of the Central Bank website.
 The figures published here represent the total stock of mortgage accounts in arrears of more than 90 days, as reported to the Central Bank of Ireland by mortgage lenders. They include mortgages that have been restructured and are still in arrears of more than 90 days, as well as mortgages in arrears of more than 90 days that have not been restructured. Please note that the figures for Q3 2013 include a small number of revisions.
 Arrears capitalisation is an arrangement whereby some or all of the outstanding arrears are added to the remaining principal balance, to be repaid over the life of the mortgage.
 This includes first-time restructures and further modifications of existing restructures.
 Sustainable solutions are defined on Page 25 of the Mortgage Arrears Resolution Targets document.
 It should also be noted that some categories reflect only a small number of arrangements, particularly in the case of BTL accounts.