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Number of mortgages in arrears hits new peak of 14pc


Picture posed. Thinkstock

Picture posed. Thinkstock

Picture posed. Thinkstock

ONE in seven mortgage holders is now in arrears, according to calculations by a leading ratings agency.

Large numbers of these homeowners are understood to be avoiding getting into talks with their banks on restructuring their mortgages.

Moody's also said house prices would fall another 20pc.

The rating agency said its calculations show 14pc of residential mortgage holders are now in arrears, which works out at 107,000 households. This is a new peak, it said.

Figures released by the Central Bank last month showed 10.2pc of mortgage holders were three months or more behind on their payments.

"The steep decline in house prices since 2007 has placed the majority of borrowers deep into negative equity," it said.

"Irish house prices have already fallen by 49.9pc between September 2007 and April 2012, and Moody's expects that house prices will fall a further 20pc from today's levels."

Central Bank figures show that there are 764,138 mortgages in the market.

Last month, the Central Bank said 77,630 mortgage accounts were in arrears for 90 days or more in March. On top of this, another 38,658 mortgage holders have an agreement from their bank to lower their monthly repayments.

Moody's said yesterday that 5.5pc of mortgage accounts were a year or more behind on repayments in April. This works out at 42,027 mortgage holders.

The 360-plus day delinquent loans (which are used as a proxy for defaults) shot up from 4.23pc of the outstanding portfolios at the start of the year.

Moody's bases its figures on a basket of mortgage accounts that have been packaged together and sold on to investors. These mortgages are still serviced by the originating banks.

The ratings agency's arrears figures tend to be more up to date than the data produced by the Central Bank. The Central Bank figures tend to concur with the ratings agency's a few months later, financial experts said.


Moody's also said the Irish economy would only grow 0.2pc in 2012.

"In this weak economic recovery, it will be difficult for distressed borrowers to significantly increase their debt servicing capabilities and so arrears are likely to continue increasing."

Mortgage lenders have begun to give the Central Bank information about how they are helping home owners in arrears.

The bank has asked for the information after a report by BlackRock said mortgage lenders needed to make significant improvements in the way they deal with mortgages.

The Central Bank will use the information to start publishing revised mortgage arrears data later this year.

Irish Independent