New data analysis examines mortgage repayments by borrowers in long term mortgage arrears

10 November 2022 Press Release

Central Bank of Ireland

  • Data shows a continuing reduction in long-term arrears across all repayment categories.

  • It indicates that borrowers can exit long-term arrears where there is cooperation between a borrower and a lender.

  • Over half of all those in long-term arrears made no repayment towards their mortgage in 2020 and 2021. 

The data shows that: 

  • Over half of accounts in long-term mortgage arrears made no repayment towards their mortgage in 2020 and 2021. The average outstanding balance of accounts making no repayment in 2021 was €240,410 and the majority of these accounts were more than 5 years in arrears.
  • In 2021, just over 22 per cent of accounts paid some but less than 50 per cent of the contracted amount. The remainder were paying more than 50 per cent towards their mortgage in both years. 
  • The overall reduction in LTMA accounts between 2020 and 2021 was mostly driven by accounts held by RCF and CSFs. When the impact of loan sales by retail banks is controlled for, banks and RCF and CSFs recorded a reduction in long term mortgage arrears of around 3 and 14 per cent in 2021 respectively. The level of LTMA borrowers classified as ‘not co-operating’ has fallen. At end-2021, lenders had classified 15,000 (or 55 per cent) of all accounts in long-term arrears as not co-operating, down from just under 16,000 accounts at end-2020.
  • The data indicates that solutions can be found, even in cases where historic repayment is low. Supervisory analysis indicates that meaningful engagement between borrowers and lenders to enable assessment of individual circumstances to agree a solution was a key driver in reducing long-term mortgage arrears in RCFs and CSFs.  

Speaking at the Compliance Institute Annual Conference today, Director of Consumer Protection, Colm Kincaid said, “Our data shows that the number of accounts in long term mortgage arrears (LTMA) continues to decline. In the twelve months to June 2022 we saw a further decrease of 12 per cent. For the first time since the Central Bank started its data collection on mortgage arrears, long term mortgage arrears have fallen below 25,000 accounts. This is the result of hard work by borrowers and firms to reduce this number, particularly over the last twelve months. It shows that by working together within a defined regulatory framework there can be solutions that work for both borrowers and firms, even in cases of borrowers with low affordability and arrears that have lasted for a number of years.  

“This past decade or more, we have learned a lot about the impact arrears can have on borrowers and our society. This has included lessons about the importance of lenders having both responsible lending practices and effective arrangements in place to anticipate arrears cases and support borrowers seeking to resolve their arrears. We have also learned about the role of regulation and the importance of having the right framework of rules in place to ensure the right outcomes. Properly learned, these lessons should stand us in good stead as we now head into a more challenging economic environment. It would be foolhardy to think that mortgage arrears is simply an issue from the crisis of the past and fail to anticipate that we will need these frameworks in place also for the challenges of the future.

“And there is still more that firms themselves can do to continue to enhance how they engage with borrowers and to go deeper into the suite of options available to reach an agreed resolution with a borrower. We will continue to scrutinise lenders’ progress against their plans and targets in the months and years to come. 

“For borrowers in or facing arrears the message remains to engage with your lender even if you are in deep arrears or have been in arrears for a prolonged period. You can also seek out the support and advice of organisations such as MABS where you want help or independent advice to support you.  A lender’s regulatory obligation to engage constructively with you are not subject to any time constraints and we have seen firms adapt their processes and approaches to seek to encourage borrower engagement.”

Notes to Editor

The Central Bank has published information for consumers in or facing financial difficulty.