Central Bank's latest arrears figures 'don't give full picture'

UCC economics lecturer Seamus Coffey

Charlie Weston Personal Finance Editor

March 05 2014 11:33 PM

THE Central Bank has been accused of producing "useless" mortgage statistics after it emerged it has excluded large numbers of non-performing home loans from its figures.

Mortgages that originated in this country, but were sold by Bank of Scotland, do not appear in the latest statistics.

UCC economics lecturer Seamus Coffey said this meant the figures lacked credibility. The bank earlier this week welcomed a fall in the numbers in mortgage arrears for the first time in years.

DROP

Central Bank figures showed there were 96,274 residential mortgage accounts in arrears for three months or more in December.

It was the first time since September 2009 that the numbers have fallen back, it said.

The regulators said there was a drop of 4,700 in the overall number of mortgage accounts in some form of arrears.

But Mr Coffey questioned the value of the arrears figures.

"It turns out that a bank (well a former bank actually) sold mortgages and such sold mortgages are not reported for the purposes of the Central Bank's arrears statistics," he wrote.

"The Central Bank's mortgage arrears statistics: useless?," he headlined a blog on the issue.

The Central Bank has admitted that it excluded some mortgages that have been sold but stressed "this does not change the overall trend".

Mr Coffey said the fact that sold mortgages are excluded from the Central Bank's arrears figures hugely undermines the value of those figures. He said non-performing mortgages sold by Bank of Scotland in December to an entity called Tanager Limited have been excluded.

Mr Coffey estimates that non-performing Bank of Scotland arrears could amount to 3,000 mortgages, which would account for the improvement in arrears figures.

He warned the planned sale of the Irish Bank Resolution Corporation mortgages, and any sale of Danske Bank mortgages, will impact on future figures.

SALES

A spokeswoman for the Central Bank admitted mortgages that have been sold on are not included in the figures, but this did not distort the statistics.

"The asset sales refer to mortgage loans that were sold and are therefore not included in our end-of-quarter four statistics. Confidentiality precludes the Central Bank from giving more information on loan transfers. However, the numbers quoted are greatly overstated and we can confirm that the impact on the quarter-on-quarter change is much lower."