Central Bank of Ireland: Q2 2015 Residential Mortgage Arrears and Repossessions Statistics

• The number of mortgage accounts for principal dwelling houses (PDH) in arrears continued to fall in Q2 2015; this marks the eight consecutive quarter of decline. A total of 98,137 (13 per cent) of accounts were in arrears at end-Q2, a decline of 6.3 per cent relative to Q1.
• PDH mortgage accounts in arrears over 90 days continued to fall during Q2. The number of accounts in arrears over 90 days at end-June was 70,299 (9.3 per cent of total), reflecting a quarter-on-quarter decline of 5.5 per cent. This represents the seventh consecutive decline in the number of PDH accounts in arrears over 90 days.
• All maturity categories of arrears, bar the over 720 days category, declined in Q2 2015. The 361-720 days in arrears category showed the largest decline, with a 12.9 per cent Q-on-Q reduction. Despite the continued increase of accounts in arrears over 720 days, the pace of increase in this category has reduced significantly in recent quarters, with an increase of just 108 accounts in Q2 2015, again marking the smallest increase in this category to-date. At end-June there were 38,041 PDH accounts in arrears over 720 days.
• Some 118,593 PDH mortgage accounts were classified as restructured at end-June, reflecting a quarter-on-quarter increase of 1.9 per cent. Of these restructured accounts, 86.3 per cent were deemed to be meeting the terms of their current restructure arrangement, highlighting the continued progress in this area. The largest increases in restructures were again recorded in the categories of split mortgage and arrears capitalisation.
• Buy-to-let (BTL) mortgage accounts in arrears over 90 days decreased by 5.2 per cent during the second quarter of the year. This quarter-on-quarter decrease reflects reductions in all arrears categories, albeit only a 0.6 per cent decline among accounts in arrears of over 720 days. At end-June, there were 15,276 BTL accounts in arrears over 720 days, with an outstanding balance of €4.6 billion equivalent to 17.2 per cent of the total outstanding balance on all BTL mortgage accounts.
• Non-bank entities now hold 46,442 mortgage accounts for PDH and BTL combined. Of this number, 19,539 are in arrears of more than 90 days, with 12,004 of these in arrears over 720 days.

DUBLIN, 7-9-2015 — /EuropaWire/ — Residential Mortgages on Principal Dwelling Houses

Arrears

At end-June 2015, there were 754,692 private residential mortgage accounts for principal dwellings held in the Republic of Ireland, to a value of €103.5 billion. Of this total stock, 98,137 accounts were in arrears, a fall of 6,556 or 6.3 per cent over the quarter. Some 70,299 accounts (9.3 per cent) were in arrears of more than 90 days.[1] The number of accounts in arrears over 90 days fell by 5.5 per cent over the quarter, marking the seventh consecutive decline in arrears over 90 days. Banks that were subject to the Central Bank’s public MART targets recorded a larger quarter-on-quarter decline of 6.4 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 €13.8 billion at end-June, equivalent to 13.4 per cent of the total outstanding balance on all PDH mortgage accounts.

Early arrears continued to decline during the second quarter of the year. There was a quarter-on-quarter fall of 8.1 per cent in the number of accounts in arrears of less than 90 days, which stood at 27,838 at end-June, or 3.7 per cent of the total stock. The number of accounts in arrears over 360 days fell to 53,323 at end-June, equivalent to 7.1 per cent of the total stock of PDH mortgage accounts and representing a fall of 2,147 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 108 in Q2, the smallest increase recorded for this category to date. Accounts in arrears over 720 days now constitute 38.8 per cent of all accounts in arrears, and 81.5 per cent of arrears outstanding. The pace of increase in very long-term arrears continued to moderate in Q2 with only a 0.3 per cent quarter-on-quarter increase compared to a 5 per cent increase in Q2 of the previous year. Banks that were subject to the Central Bank’s public MART targets, however, recorded a 0.7 per cent quarterly decline in the over 720 day category. For all institutions, the total number of PDH accounts in arrears declined by 6.3 per cent relative to Q1. Nonetheless, the value of accounts in longer-term arrears over 360 days remains large, amounting to €11.1 billion at end-June.

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 118,593 PDH mortgage accounts were categorised as restructured at end-June 2015. This reflects an increase of 1.9 per cent compared to end-March 2015. The share of interest only arrangements of less than one year and reduced payment arrangements fell further during Q2, to 15.9 per cent from 17.3 per cent at end Q1, indicating a continuing move out of short-term arrangements. Arrears capitalisations showed the most significant quarterly increase and continued to account for the largest share of restructured accounts (27.3 per cent) at end-June. Split mortgages also accounted for a large cohort of restructures and represented 19.4 per cent of all PDH restructures at end Q2. A breakdown of restructured mortgages by type is presented in Figure 2. A total of 14,512 new restructure arrangements[3] were agreed during the second quarter of 2015. The data on arrears and restructures indicate that of the total stock of 98,137 PDH accounts that were in arrears at end-June, 32,003 (27 per cent) were classified as restructured at that time. Of the total stock of 70,299 PDH accounts that were in arrears of more than 90 days, 26.5 per cent were classified as restructured, compared to 26.2 per cent at end-March.

Some 73 per cent of restructured accounts were not in arrears at end-June 2015. 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-June, 86.3 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 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-June 2015, broken down by arrangement type. Lower numbers indicate a higher incidence of ‘re-default’, which is particularly evident amongst 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, 25.3 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 second quarter of 2015, legal proceedings were issued to enforce the debt/security on a PDH mortgage in 2,533 cases. During Q2, there were 916 cases where court proceedings concluded but arrears remained outstanding. In 517 cases the Courts granted an order for repossession or sale of the property. There were 1,696 properties in the banks’ possession at the beginning of the quarter. A total of 422 properties were taken into possession by lenders during the quarter, of which 201 were repossessed on foot of a Court Order, while the remaining 221 were voluntarily surrendered or abandoned. During the quarter 291 properties were disposed of. The number of properties in possession at the end of the quarter was also impacted by reclassification issues affecting 5 PDH accounts. These issues mainly reflect the reclassification of BTL accounts as PDH accounts. As a result, lenders were in possession of 1,832 PDH properties at end-June 2015.

Residential Mortgages on Buy-to-Let Properties

Arrears

At end-June 2015, there were 137,297 residential mortgage accounts for buy-to-let properties held in the Republic of Ireland, to a value of €26.7 billion. Some 31,483 (22.9 per cent) of these accounts were in arrears, compared to 33,475 (24 per cent) at the end of March. Of this total stock of accounts, 26,057, or 19 per cent, were in arrears of more than 90 days, reflecting a decrease of 5.2 per cent over the quarter. Banks that were subject to the Central Bank’s public MART targets recorded a larger decline of 6.5 per cent in the number of BTL accounts in arrears over 90 days. The outstanding balance on all lenders’ BTL mortgage accounts in arrears of more than 90 days was €7.2 billion at end-June, equivalent to 27.1 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 23,882 at end-June 2015, reflecting a quarter-on-quarter fall of 5.3 per cent. BTL accounts in arrears more than 720 days showed a 0.6 per cent decrease in Q2, marking the third consecutive quarterly decline in this category. These accounts in arrears of over 720 days now number 15,276 or 11.1 per cent of the total stock of BTL mortgage accounts and 83 per cent of outstanding arrears. The outstanding balance on these accounts was €4.6 billion at end-June, equivalent to 17.2 per cent of the total outstanding balance on all BTL mortgage accounts. BTL accounts in arrears of up to 90 days also declined by 9.3 per cent in the second quarter of the year.

Restructuring Arrangements

A total stock of 26,004 BTL mortgage accounts were categorised as restructured at end-June 2015, reflecting an increase of 1.8 per cent from the stock of restructured accounts reported at end-March. Of this total stock of restructured accounts recorded at end-June, 70.3 per cent were not in arrears, while 82.1 per cent were meeting the terms of their restructure arrangement. A total of 3,290 new restructure arrangements were agreed during the second quarter of the year. On the BTL side, the largest cohort of restructured mortgages were in reduced payment greater than interest only arrangements. The data on arrears and restructures indicate that of the total stock of 31,483 BTL accounts that were in arrears at end-June, 7,736 (24.6 per cent) were classified as restructured at that time.

Legal Proceedings and Repossessions

During the second quarter of 2015 rent receivers were appointed to 891 BTL properties, bringing the stock of accounts with rent receivers appointed to 6,433. There were 653 BTL properties in the banks’ possession at the beginning of Q2 2015. A total of 234 properties were taken into possession by lenders during the quarter, of which 161 were repossessed on foot of a Court Order, while the remaining 73 were voluntarily surrendered or abandoned. During the quarter 211 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 BTL accounts as PDH accounts. As a result, lenders were in possession of 668 BTL properties at end-June 2015.

Residential Mortgages issued by Non-Bank Entities

Non-bank entities accounted for 5.2 per cent of the total stock of residential mortgage accounts outstanding (PDH and BTL) at end-June 2015 (6.5 per cent in value terms). A total of 19,539 mortgage accounts issued by these entities were in arrears of more than 90 days at end-June – this figure accounted for 20.3 per cent of total mortgages in arrears over 90 days. The outstanding balance on these accounts was €4.5 billion, equivalent to 53.4 per cent of the total outstanding balance on all mortgage accounts issued by non-bank entities. Non-banks holdings of accounts in arrears over 720 days numbered 12,004, this represented 22.5 per cent of all accounts in arrears over 720 days.

Annex 1: Mortgage Arrears Data and Further Information

The mortgage arrears data, along with a set of explanatory notes, are available in the Mortgage Arrears section of the Statistics portal of the Central Bank of Ireland website: http://www.centralbank.ie/polstats/stats/mortgagearrears/Pages/Data.aspx.

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.

View information release with charts and related data tables.