Tuesday 24 October 2017

Concern as 3.8pc of home loans are 90 days in arrears

Joe Brennan

Irish mortgage arrears rose in March and the rate of loans being paid off remained stubbornly low as homeowners struggle with rising unemployment, according to international rating agency Moody's.

A report by the agency into almost a third of the prime Irish mortgage market found that 3.8pc of home loans were at least 90 days in arrears at the end of the first quarter -- up from 2.1pc from the same period last year.

Some 3.3pc of mortgages were in the same level of trouble in March.

Moody's reports look at the €42.6bn-plus worth of Irish mortgages that are securitised -- or pooled and repackaged into bonds to be sold to investors as a way of raising funds.

In recent years, these securitisation deals have been used more regularly as a way of borrowing from the European Central Bank.

Loans that are delinquent for more than 360 days have more than doubled over the space of a year to 0.9pc of mortgages at the end of March.

Tumble

The total redemption rate for home loans was broadly unchanged on the year, at 4.9pc, while the figure had been consistently above 15pc before the property market began to tumble in 2007.

Official data shows that house prices have fallen by a third from their peak in March 2007, but anecdotal evidence points to an almost halving of values around the country.

"The contracting economy and negative credit growth point towards further declining demand for housing and further drops in house prices," the ratings agency said.

Moody's Economy.com, a division of Moody's Analytics, expects house prices to fall a further 18pc before resuming growth in the second quarter of 2013.

It says that sustained gross domestic product growth is not expected to return before late 2010, with the economy seen as contracting by 1pc for the year as a whole. Moody's Economy.com predicts the unemployment rate to peak at 13.8pc later this year.

While the low interest rates have helped many borrowers to stay current, its analysts do not expect the demand for credit to increase until the labour market starts to recover in the second half of the year.

Irish Independent

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