Residential Mortgage Arrears and Repossessions Statistics: Q1 2016

View information release with charts (PDF 622.42KB) and related data tables.

Summary

• The number of mortgage accounts for principal dwelling houses (PDH) in arrears continued to fall in Q1 2016; this marks the eleventh consecutive quarter of decline. A total of 85,989 (11 per cent) of accounts were in arrears at end-Q1, a decline of 2.6 per cent relative to Q4 2015.
• The number of accounts in arrears over 90 days at end-March was 59,696 (8 per cent of total), reflecting a quarter-on-quarter decline of 3.6 per cent. This represents the tenth consecutive decline in the number of PDH accounts in arrears over 90 days.
• All maturity categories of arrears, including the over 720 days’ category, declined in Q1 2016. This category recorded a third consecutive decline, having fallen for the first time in Q3 2015.
• Some 120,447 PDH mortgage accounts were classified as restructured at end-March. Of these restructured accounts, 87 per cent were deemed to be meeting the terms of their current restructure arrangement; the highest level since the series began. The largest increases in restructures were recorded in the categories of arrears capitalisation and permanent split mortgages.
• Buy-to-let (BTL) mortgage accounts in arrears over 90 days decreased by 3.5 per cent during the first quarter of 2016. At end-March there were 14,924 BTL accounts in arrears over 720 days, with an outstanding balance of €4.4 billion, equivalent to 17 per cent of the total outstanding balance on all BTL mortgage accounts.
• There has been a decrease of 4.8 per cent in the number of BTL accounts where a rent receiver was appointed, following an increase of 30.5 per cent in the previous quarter.
  Non-bank entities now hold 47,409 mortgage accounts for PDH and BTL combined. Of this number, 19,081 were in arrears of more than 90 days, with 13,013 of these in arrears over 720 days at end-March. The equivalent figures for PDH mortgage accounts were 14,443 accounts in arrears over 90 days, and 9,356 in arrears of more than 720 days.

Residential Mortgages on Principal Dwelling Houses

Arrears

At end-March 2016, there were 743,700 private residential mortgage accounts for principal dwellings held in the Republic of Ireland, to a value of €100.9 billion. Of this total stock, 85,989 accounts were in arrears; a fall of 2,303 or 2.6 per cent over the quarter. Some 59,696 accounts (8 per cent) were in arrears of more than 90 days.¹ The number of accounts in arrears over 90 days fell by 3.6 per cent over the quarter, marking the tenth 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 3.9 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 over €11.9 billion at end-March, equivalent to 12 per cent of the total outstanding balance on all PDH mortgage accounts.

Early arrears continued to decline during the first quarter of the year. There was a quarter-on-quarter fall of 0.3 per cent in the number of accounts in arrears of less than 90 days, which stood at 26,293 at end-March, or 4 per cent of the total stock. The number of accounts in arrears over 360 days fell to 46,490 at end-March, equivalent to 6 per cent of the total stock of PDH mortgage accounts and representing a fall of 1,606 accounts over the quarter.  Accounts in arrears of between 361 days and 720 days saw the largest quarter-on-quarter decline, of 8.9 per cent.  The number of accounts in arrears over 720 days also declined by 559 in Q1, or 1.5 per cent; this was the third decline in this category since the series began and follows a 2.6 per cent fall in the previous quarter. This represents a year-on-year decline of 5.6 per cent for accounts in arrears over 720 days. This contrasts significantly with Q4 2014 when the equivalent figure was an increase of 12.5 per cent. Accounts in arrears over 720 days now constitute 42 per cent of all accounts in arrears, and 86 per cent of arrears outstanding. Banks that were subject to the Central Bank’s public MART targets recorded a 1.8 per cent quarterly decline in the over 720 day category. For all institutions the value of accounts in longer-term arrears over 360 days remains large, amounting to €9.8 billion at end-March.

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 interest². 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 120,447 PDH mortgage accounts were categorised as restructured at end-March 2016. This reflects a decline of 292 accounts compared to end-December 2015. The share of interest only arrangements and reduced payment arrangements fell further during Q1, to 14 per cent, indicating a continuing move out of short-term arrangements. Arrears capitalisations and permanent split mortgages showed the most significant increases and continued to account for the largest shares of restructured accounts at 30 per cent and 21 per cent, respectively, at end-March. A breakdown of restructured mortgages by type is presented in Figure 2. A total of 9,641 new restructure arrangements³ were agreed during the first quarter of 2016. The data on arrears and restructures indicate that of the total stock of 85,989 PDH accounts that were in arrears at end-March, 28,144 (33 per cent) were classified as restructured at that time. Of the total stock of 59,696 PDH accounts that were in arrears of more than 90 days, 25 per cent were classified as restructured; largely unchanged from the previous quarter.

Some 77 per cent of restructured accounts were not in arrears at end-March 2016. 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-March, 87 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-March 2016, 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, close to 24 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 first quarter of 2016, legal proceedings were issued to enforce the debt/security on a PDH mortgage in 1,895 cases. During Q1 2016, there were 706 cases where court proceedings concluded but arrears remained outstanding. In 277 cases the Courts granted an order for repossession or sale of the property. There were 1,760 properties in the banks’ possession at the beginning of the quarter. A total of 421 properties were taken into possession by lenders during the quarter, of which 139 were repossessed on foot of a Court Order, while the remaining 282 were voluntarily surrendered or abandoned. During the quarter 391 properties were disposed of. The number of properties in possession at the end of the quarter was also impacted by reclassification issues and return of property affecting 6 PDH accounts. As a result, lenders were in possession of 1,784 PDH properties at end-March 2016.

Residential Mortgages on Buy-to-Let Properties

Arrears

At end-March 2016, there were 136,295 residential mortgage accounts for buy-to-let properties held in the Republic of Ireland, to a value of €25.6 billion. Some 27,891 (20 per cent) of these accounts were in arrears, compared to 28,760 accounts at end-December 2015; reflecting a decrease of 3 per cent over the quarter. Of the total arrears, 22,516 or 17 per cent were in arrears of more than 90 days, reflecting a decrease of 3.5 per cent over the quarter. Banks that were subject to the Central Bank’s public MART targets recorded a slightly larger decline of 3.8 per cent in the number of BTL accounts in arrears over 90 days. The outstanding balance on all BTL mortgage accounts in arrears of more than 90 days was €6.2 billion at end-March, equivalent to 24 per cent of the total outstanding balance.

The number of BTL accounts that were in arrears of more than 180 days was 20,862 at end-March 2016, reflecting a quarter-on-quarter fall of 3.6 per cent. BTL accounts in arrears more than 720 days declined by 0.9 per cent in Q1, marking six consecutive quarterly declines. Accounts in arrears of over 720 days now number 14,924 or 11 per cent of the total stock of BTL mortgage accounts, and 85 per cent of outstanding arrears. The outstanding balance on these accounts was €4.4 billion at end-March, equivalent to 17 per cent of the total outstanding balance on all BTL mortgage accounts.

Restructuring Arrangements

A total stock of 27,222 BTL mortgage accounts were categorised as restructured at end-March 2016, reflecting an increase of 13 accounts from the stock of restructured accounts reported at end-December 2015. Of the total stock of restructured accounts recorded at end-March, 75 per cent were not in arrears, while 86 per cent were meeting the terms of their restructure arrangement. A total of 2,681 new restructure arrangements were agreed during the first quarter of the year; this represented the lowest number of new restructures agreed in a quarter since the series began. On the BTL side, the largest cohort of restructured mortgages was in reduced payment (greater than interest only) arrangements. The data on arrears and restructures indicate that of the total stock of 27,891 BTL accounts that were in arrears at end-March, 6,841 (25 per cent) were classified as restructured at that time.

Legal Proceedings and Repossessions

During the first quarter of 2016 rent receivers were appointed to 751 BTL properties, bringing the stock of accounts with rent receivers appointed to 5,682; this is down 4.8 per cent from end-December 2015. There were 668 BTL properties in the banks’ possession at the beginning of Q1 2016. A total of 302 properties were taken into possession by lenders during the quarter, which represented a record high for the volume of repossessions in a quarter since the series began in 2012. Of the total BTL repossessions in the quarter, 141 were repossessed on foot of a Court Order, while the remaining 161 were voluntarily surrendered or abandoned. During Q1 2016 284 properties were disposed of. The number of properties in possession at the end of the quarter was also impacted by reclassification issues and the cessation of repossession proceedings affecting five BTL accounts. As a result, lenders were in possession of 685 BTL properties at end-March 2016.

Residential Mortgages held by Non-Bank Entities

Arrears

At end-March 2016 non-bank entities accounted for 5 per cent of the total stock of PDH mortgage accounts outstanding. For Buy-to-Lets the proportion was higher at 7 per cent. Overall, non-bank entities accounted for more than 5 per cent of the total stock of residential mortgage accounts outstanding (PDH and BTL) at end-March 2016 (7 per cent in value terms).

A total of 19,081 mortgage accounts held by these entities were in arrears of more than 90 days at end-March – this figure accounted for 23 per cent of total mortgages in arrears over 90 days. The outstanding balance on these accounts was €4.5 billion, equivalent to 52 per cent of the total outstanding balance on all mortgage accounts held by non-bank entities. For PDH accounts, 14,443 accounts with an outstanding balance of €3.2 billion were in arrears of more than 90 days.

Non-bank entities’ holdings of accounts in arrears over 720 days numbered 13,013; this represented 26 per cent of all accounts in arrears over 720 days, and is unchanged from end-December 2015. Of this total, 9,356 relate to PDH accounts; this represented 26 per cent of all PDH accounts in arrears over 720 days.

Restructuring Arrangements

A total of 8,713 residential mortgage accounts (PDH and BTL) were classified as restructured at end-March 2016, representing 18 per cent of the total stock of residential mortgage accounts held by non-bank entities. Of the total restructures recorded at end-March, just over half (52 per cent) were not in arrears. Short-term arrangements, such as Interest Only and Reduced Payments, along with Arrears Capitalisation arrangements represented the majority of total restructure arrangements. These solutions cumulatively accounted for 75 per cent of total non-bank restructures.

A breakdown of arrears and restructures arrangements held by non-bank entities is presented in Table 5.

Mortgage Arrears Data and Further Information

The mortgage arrears data (XLSX 1.86MB), along with a set of explanatory notes, are available in the Mortgage Arrears Section.

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 (PDF 1.03MB).

The above guides, that include information on the protections that are available to consumers in financial difficulty, are available to download in the consumer information section.

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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.