Wednesday 24 January 2018

Border and midlands regions have highest mortgage arrears

Percentages of mortgages in arrears by county
Percentages of mortgages in arrears by county
The Central Bank
Charlie Weston

Charlie Weston

THE border and midlands regions have higher mortgage default rates than other parts of the country.

And boom-time buyers are still stuck in negative equity - where the size of the mortgage is greater than the current value of the property.

Mortgage default rates are lowest in Cork, followed by Dublin, Galway, Tipperary and Mayo, new Central Bank figures show.

Longford has the highest rate of mortgages in arrears, with almost one in five home loans in default. High levels of mortgages in default were also recorded in Cavan, where 17pc of mortgages are in arrears. Laois, Meath and Offaly also have high levels of arrears.

Just over 11pc of mortgages are in default in Dublin, compared with 10pc in Cork.

There has also been a rise in those in arrears for two years or more on their home loans.

"An increasing share of arrears cases are moving into long-term arrears (more than 720 days past due)," a new dataset from the Central Bank, the Household Credit Market Report, shows.

Those who are more than two years behind on their mortgage payments are at risk of losing their homes.

Many of those who are in long-term arrears have not engaged with their banks, which means they lose protections under the Central Bank's mortgage arrears code that stops their lenders seeking to repossess their homes.

Some €8bn worth of the total arrears were more than two years past due, the Central Bank said.

The Central Bank report shows that higher property prices have failed to lift a large proportion of mortgage holders out of negative equity.

More than half of the mortgages taken out in 2007 were still in negative equity by last June.

Those who bought in 2005 and 2006 are also likely to still owe more money than their property is worth.

There was a rise in the amount of new lending in the run-up to the implementation of its new mortgage lending restrictions.

The value of new mortgages increased from €750m in the third quarter of 2013 to €1.1bn in the same period in 2014. The number of new loans rose from 4,482 to 6,308.

First-time buyers accounted for more than half of the new loans in the third quarter, with movers accounting for a third.

And up around a quarter of the value of personal loans made by banks to consumers were in arrears, the new data series from the Central Bank shows.

The Central Bank report states: "The default rate for unsecured term loans was highest at over 24pc of the balance."

Loans where there is security, such a car loan, had the second highest default rate at 15pc. Revolving loans, better known as overdrafts, have a default rate of 12pc, the Central Bank report indicates.

Irish Independent

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