New research analyses long-term mortgage arrears

• Despite improvements in aggregate arrears levels, long-term mortgage arrears (LTMA) have remained stubbornly high.
• Growth in LTMA driven by mortgage affordability, income and unemployment shocks, non-mortgage debt accumulation and falls in house prices

The Central Bank has today published an Economic Letter ‘Households in long-term mortgage arrears: lessons from economic research’ and a Research Technical Paper ‘Some defaults are deeper than others: Understanding long-term mortgage arrears’.

The papers analyse the range of economic and demographic characteristics associated with the experience of long-term mortgage arrears in Ireland.

The research found that households in long-term mortgage arrears are significantly more likely to have lower income, higher mortgage burdens relative to income, larger mortgage affordability shocks, unemployment shocks and divorce since origination. These borrowers are also more likely to have accumulated large stocks of non-mortgage debts, such as Buy-to-Let mortgages, credit card, auto loans and other consumer debt.

The research also shows that long-term mortgage arrears borrowers face higher interest rates, and that these arrears are more prevalent among more vulnerable family types, such as single borrowers with multiple children.