Thursday 14 December 2017

Lenders holding tracker mortgages worth €39bn

Donal O'Donovan

Donal O'Donovan

IRISH lenders hold €39bn of the "tracker" mortgages identified as a key threat to the sector, according to the latest figures from the Central Bank.

The same figures show that the amount of household wealth deposited in Irish banks rose in the first three months of the year, while the combined debts of Irish families shrank.

The interest rate charged on tracker mortgages is fixed to the rate set by the European Central Bank. With rates at historic lows, banks are losing money on most tracker loans, even though the debts are being repaid.

The Department of Finance has identified the low-yielding "trackers" as one of the major concerns hanging over the bailed-out banks.

Coming up with a deal to remove the loans from the banks, without having to crystallise losses, is central to the Government's efforts to get what it regards as a "fairer" deal on banks from the EU/IMF bailout lenders -- something it has been seeking so far without success.

Data from the Central Bank published yesterday shows that almost half of the €79.9bn of mortgage loans on banks' balance sheets at the end of March are trackers. The interest charged on 87pc of all home loans is linked to the ECB rate.

The latest figures show that household debt is being repaid far more quickly than new loans are being created.

Total mortgage debt in the country stood at just under €130bn at the end of March, down from a peak of €149bn in 2009, following nine consecutive quarters of decline.

The mortgage total includes €49.7bn of loans that have been "securitised", the term for loans packaged up and shifted off bank balance sheets into money-raising investment vehicles.

Total household debt, including unsecured personal loans and other bank debt, stood at €148bn at the end March and has been in constant decline since the peak in 2006.

The amount of cash on deposit at Irish banks rose to €86.9bn at the end of March, the first increase after a year of declines. Deposits increased 1pc in the first three months of the year, though there was still less cash on deposit than at the same time in 2011.

Irish Independent

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