Residential Mortgage Arrears and Repossessions Statistics: Q4 2014 

Statistical release 6 March 2015

View information release with charts and related data tables.

Summary

  • The number of mortgage accounts for principal dwelling houses (PDH) in arrears continued to fall in Q4 2014 marking the sixth consecutive quarterly decline. A total of 110,366 (14.5 per cent) of accounts were in arrears at end-Q4, a decline of 6.4 per cent relative to Q3.
  • PDH mortgage accounts in arrears over 90 days continued to fall during Q4. The number of accounts in arrears over 90 days at end-December was 78,699 (10.4 per cent of total), reflecting a quarter-on-quarter decline of 7.4 per cent. This represents the fifth consecutive decline in the number of PDH accounts in arrears over 90 days.
  • Despite the fall in arrears over 90 days, the number of PDH accounts in arrears over 720 days continues to rise. However, the increase of 294 accounts in Q4 was the lowest increase recorded in this category to date.
  • The total outstanding balance on PDH accounts in arrears over 720 days was €8.2 billion at end-December, equivalent to 7.9 per cent of the total outstanding balance on PDH mortgage loans.
  • Some 114,674 PDH mortgage accounts were classified as restructured at end-December, reflecting a quarter-on-quarter increase of 4.3 per cent. Of these restructured accounts, 84.9 per cent were deemed to be meeting the terms of their current restructure arrangement. The largest increases in restructures were again recorded in the categories of split mortgages and arrears capitalisations.
  • Buy-to-let (BTL) mortgage accounts in arrears over 90 days decreased by 7.6 per cent during the fourth quarter of the year; the largest decrease recorded in this category to date. This quarter-on-quarter decrease was reflected across all categories of arrears, albeit a far more marginal decrease was recorded in the over 720 days category. At end-December, there were 15,386 BTL accounts in arrears over 720 days, with an outstanding balance of €4.8 billion equivalent to 17.1 per cent of the total outstanding balance on all BTL mortgage accounts.

Residential Mortgages on Principal Dwelling Houses

Arrears

At end-December 2014, there were 758,988 private residential mortgage accounts for principal dwellings held in the Republic of Ireland, to a value of €104.9 billion. Of this total stock, 110,366 accounts were in arrears, a fall of 7,523 or 6.4 per cent over the quarter. Some 78,699 accounts (10.4 per cent) were in arrears of more than 90 days.[1] The number of accounts in arrears over 90 days fell by 7.4 per cent over the quarter, marking the fifth consecutive decline in arrears over 90 days. Banks subject to the Central Bank’s MART targets recorded a larger quarter-on-quarter decline of 8.1 per cent in the number of PDH accounts in arrears over 90 days. The outstanding balance on all lenders’ PDH mortgage accounts in arrears of more than 90 days was €15.5 billion at end-December, equivalent to 14.8 per cent of the total outstanding balance on all PDH mortgage accounts. 

Early arrears declined significantly during the fourth quarter of the year. There was a quarter-on-quarter fall of 3.8 per cent in the number of accounts in arrears of less than 90 days, which stood at 31,667 at end-December, or 4.2 per cent of the total stock. Q4 2014 marked the second consecutive decline in longer-term arrears since data was first collected in this category. The number of accounts in arrears over 360 days reached 57,095 at end-December, equivalent to 7.5 per cent of the total stock of PDH mortgage accounts, representing a fall of 2,270 accounts over the quarter. Despite the reduction in arrears over 360 days, very long-term arrears continued to increase. The number of accounts in arrears over 720 days rose by 294 in Q4, the smallest increase recorded for this category to date. Accounts in arrears over 720 days now constitute 34.2 per cent of all accounts in arrears, and 76.6 per cent of arrears outstanding. However, it is worth noting that the pace of increase in very long-term arrears continued to moderate in Q4 with only a 0.8 per cent quarter-on-quarter increase compared to a 5.5 per cent increase in Q4 of the previous year. Banks subject to the Central Bank’s MART targets, however, recorded a small quarterly decline in the over 720 day category, the first decline in this category to date. For all institutions, the total number of PDH accounts in arrears declined by 6.4 per cent relative to Q3 (5.9 per cent decline in value terms). Nonetheless, the value of accounts in longer-term arrears over 360 days remains large, amounting to €11.9 billion at end-December.

Restructuring Arrangements

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[2]. The figures also include advanced modification options such as split mortgages and trade-down mortgages, which have been introduced to provide more long-term solutions for customers in difficulty.

A total stock of 114,674 PDH mortgage accounts were categorised as restructured at end-December 2014. 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 20 per cent from 22 per cent at end Q3, indicating a continuing move out of short-term arrangements. Arrears capitalisations continued to account for the largest share of restructured accounts (25.8 per cent) at end-December. Split mortgages showed the most significant quarterly increase, and now represent 17.3 per cent of all PDH restructures. A breakdown of restructured mortgages by type is presented in Figure 2. A total of 22,038 new restructure arrangements[3] were agreed during the fourth quarter of 2014. The data on arrears and restructures indicate that of the total stock of 110,366 PDH accounts that were in arrears at end-December, 36,256 (31.6 per cent) were classified as restructured at that time. Of the total stock of 78,699 PDH accounts that were in arrears of more than 90 days, 28.1 per cent were classified as restructured, compared to 29.3 per cent at end-September.

Some 68.4 per cent of restructured accounts were not in arrears at end-December 2014. 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, 84.9 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 as defined within the Mortgage Arrears Resolution Targets[4]. For instance, short-term interest only restructures are, in general, not part of longer-term sustainable solutions. The MART sustainability targets also include a significant number of accounts in arrears which are part of a legal process. These accounts are not classified as restructured within the Mortgage Arrears Statistics. Arrears associated with such accounts are recorded in full in the data.

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 2014, 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.[5] Nonetheless, the figures imply that of the total stock of accounts in the arrears capitalisation category, 28.7 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 2014, legal proceedings were issued to enforce the debt/security on a PDH mortgage in 2,543 cases. Court proceedings concluded in 721 cases during the quarter, and in 314 of these cases the Courts granted an order for repossession or sale of the property. There were 1,393 properties in the banks’ possession at the beginning of the quarter. A total of 429 properties were taken into possession by lenders during the quarter, of which 123 were repossessed on foot of a Court Order, while the remaining 306 were voluntarily surrendered or abandoned. During the quarter 222 properties were disposed of. The number of properties in possession at the end of the quarter was also impacted by reclassification issues affecting 12 PDH accounts. These issues mainly reflect the reclassification of PDH accounts as BTL accounts. As a result, lenders were in possession of 1,588 PDH properties at end-December 2014.

Residential Mortgages on Buy-to-Let Properties

Arrears

At end-December 2014, there were 140,995 residential mortgage accounts for buy-to-let properties held in the Republic of Ireland, to a value of €28 billion. Some 35,583 (25.2 per cent) of these accounts were in arrears, compared to 38,463 (26.8 per cent) at the end of September. Of this total stock of accounts, 29,224, or 20.7 per cent, were in arrears of more than 90 days, reflecting a decrease of 7.6 per cent over the quarter, the most pronounced decrease in this category to date. Banks subject to the Central Bank’s MART targets recorded a slightly larger decline of 7.9 per cent in the number of BTL accounts in arrears over 90 days. However, part of this quarter’s decline reflects property sales. The outstanding balance on all lenders’ BTL mortgage accounts in arrears of more than 90 days was €8.2 billion at end-December, equivalent to 29.4 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 26,621 at end-December 2014, reflecting a quarter-on-quarter fall of 5.9 per cent, the largest quarterly fall in the category to-date. The over 720 days in arrears category also declined over the quarter, albeit at the far more marginal rate of 0.3 per cent. These accounts in arrears of over 720 days now number 15,386 or 11 per cent of the total stock of BTL mortgage accounts and 77.7 per cent of outstanding arrears. The outstanding balance on these accounts was €4.8 billion at end-December, equivalent to 17.1 per cent of the total outstanding balance on all BTL mortgage accounts. BTL accounts in arrears of up to 90 days also fell by 7.1 per cent in the fourth quarter of the year.

Restructuring Arrangements

A total stock of 25,334 BTL mortgage accounts were categorised as restructured at end-December 2014, reflecting an increase of 1.6 per cent from the stock of restructured accounts reported at end-September. Of this total stock of restructured accounts recorded at end-December, 65.2 per cent were not in arrears, while 79.7 per cent were meeting the terms of their restructure arrangement. A total of 4,346 new restructure arrangements were agreed during the fourth quarter of the year. Arrears capitalisation arrangements and reduced payment arrangements accounted for the majority of restructures in place for BTL mortgages with a 46.6 per cent share at end-December. The data on arrears and restructures indicate that of the total stock of 35,583 BTL accounts that were in arrears at end-December, 8,823 (24.8 per cent) were classified as restructured at that time.

Legal Proceedings and Repossessions

There were 634 BTL properties in the banks’ possession at the beginning of Q4 2014. A total of 207 properties were taken into possession by lenders during the quarter, of which 113 were repossessed on foot of a Court Order, while the remaining 94 were voluntarily surrendered or abandoned. During the quarter 214 properties were disposed of. The number of properties in possession at the end of the quarter was also impacted by reclassification issues affecting 8 BTL accounts. These issues mainly reflect the reclassification of PDH accounts as BTL accounts. As a result, lenders were in possession of 634 BTL properties at end-December 2014.

Residential Mortgages issued by Non-Bank Lenders

Non-bank lenders accounted for 5.6 per cent of the total stock of residential mortgage accounts outstanding at end-December 2014 (6.3 per cent in value terms). A total of 19,937 mortgage accounts issued by these lenders were in arrears of more than 90 days at end-December – this figure accounted for 18.5 per cent of total mortgages in arrears over 90 days. The outstanding balance on these accounts was €4.6 billion, equivalent to 54.5 per cent of the total outstanding balance on all mortgage accounts issued by non-bank lenders.

Notes 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.


 

[1] 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.

[2] 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.

[3] This includes first-time restructures and further modifications of existing restructures.

[4] Sustainable solutions are defined on Page 25 of the Mortgage Arrears Resolution Targets document.

[5] It should also be noted that some categories reflect only a small number of arrangements, particularly in the case of BTL accounts.