Goodbody economist describes mortgage data as a ‘mixed bag’

A "mixed bag" is how Goodbody Stockbrokers' economist Dermot O'Leary describes the latest data on mortgage arrears, published by the Central Bank of Ireland.

There are some positive trends, which reflect both the nascent economic recovery and the efforts of the banks to help their arrears customers get back on an even keel. The figures show that arrears continue to fall. At the end of September, the number of owner-occupied mortgage accounts in arrears of 90 days or more had fallen by 6.4 per cent on the quarter to stand at 117,889. That’s the equivalent of 15.5 per cent of total mortgages in this category.

Early arrears declined significantly during the third quarter. There was a quarter-on-quarter fall of 7.6 per cent in the numbers with arrears of less than 90 days. This stood at 32,934 at end-September, or 4.3 per cent of the total stock.

On the flip side, the Central Bank’s figures show that 16.8 per cent of those on restructured mortgages, which involve a variety of solutions, have re-defaulted.

Some solutions appears to be working better than others. For example, in the case of split mortgages, 95.6 per cent of owner-occupied accounts are meeting the terms of their restructured mortgages.

The equivalent figure is just 57.1 per cent for those with a permanent interest rate reduction, and 68 per cent for arrears capitalisation, a category that accounts for just more than one quarter of restructuring arrangements.

There was another sobering statistic in the figures published by the regulator. Some €12.2 billion worth of mortgages have been in arrears of one year or more, of which €8 billion worth of loans are two years or more behind with payments. The number of accounts in arrears of 720 days or more rose by 418 in the quarter.

The arrears built up on accounts that are a year or more behind with their payments amounts to €2.2 billion.

It’s a hefty sum and given the length of time that people have been in arrears, you’d have to wonder how realistic it is to expect that this money will ever be repaid to the lenders. And why are some of these customers effectively being kept on life support by their banks?

A “mixed bag” indeed.