View information release with charts and related data tables
The Central Bank today publishes an enhanced statistical release on mortgage arrears. The enhanced data provides a more granular breakdown of accounts in long-term arrears, borrower co-operation levels, and the legal status of arrears accounts. A ‘Behind the Data’ research publication further discussing the enhanced data was also published today. The data presented in this release will be incorporated into the existing publication tables before end-October.
Summary[1]
- The number of principal dwelling houses (PDH) accounts in arrears over 90 days remained unchanged, at 5.6 per cent of all PDH accounts at end-June. Similarly, accounts in arrears over 720 days decreased marginally to 26,228 and account for 46 per cent of all PDH accounts in arrears.
- When including short term arrears of under 90 days, PDH mortgage accounts in arrears decreased by 6,645 accounts in Q2 2020, driven by a decrease of 6,627 accounts in early arrears (i.e. less than 90 days). This decrease can be largely attributed to an unwinding of the increase in the previous quarter, in part owing to the introduction of Covid-19 payment breaks towards the end of the previous quarter.
- Of the total number of PDH accounts in arrears, 17 per cent (or 9,591 accounts) were overdue by between 2 and 5 years, 21 per cent (or 11,936 accounts) were in arrears by between 5 and 10 years, while 8 per cent (or 4,701) were in arrears greater than 10 years.
- Non-bank entities[2] held 13 per cent of all PDH mortgage accounts outstanding at end-June 2020; however held 56 per cent of all PDH mortgages in arrears over 720 days (Table 1).
Residential Mortgages on Principal Dwelling Houses
Arrears
At end-June 2020, there were 736,307 private residential mortgage accounts for principal dwellings held in the Ireland, with a value of €98 billion. Of this total stock, 56,792 accounts were in arrears, representing a decrease of 6,645 accounts (or 10 per cent) over the quarter. This decrease in arrears was driven by a decrease of 6,627 accounts in arrears up to 90 days. At end-June 2020, some 41,061 accounts (5.6 per cent) were in arrears of more than 90 days (Figure 1).[3]
The outstanding balance on PDH mortgage accounts in arrears of more than 90 days was €7.7 billion at end-June, equivalent to 8 per cent of the total outstanding balance on all PDH mortgage accounts. Accounts in arrears over 720 days accounted for 46 per cent of all accounts in arrears at end-June. Of the total number of PDH accounts in arrears, 17 per cent (or 9,591 accounts) were overdue by between 2 and 5 years, 21 per cent (or 11,936 accounts) were in arrears by between 5 and 10 years, while 8 per cent (or 4,701) were in arrears over 10 years.
Restructuring Arrangements[4]
A total stock of 77,789 PDH mortgage accounts were categorised as restructured at end-June 2020. Arrears capitalisation[5] accounted for the largest share of restructured accounts at 30 per cent at end-June (Figure 2), while the share of accounts on temporary restructure arrangements remained low at 10 per cent.
There were 3,140 new restructure arrangements[6] agreed during the second quarter of 2020. The data on arrears and restructures indicate that of the total stock of 56,792 PDH accounts that were in arrears at end-June, 14,152 accounts (25 per cent) were classified as restructured. The remaining 75 per cent of accounts in arrears were not part of a restructure arrangement at end-June 2020.
Some 82 per cent of restructured accounts were not in arrears at end-June 2020.[7] At end-June, 87 per cent of restructured PDH accounts were deemed to be meeting the terms of their arrangement[8]. This means that the borrower is, at a minimum, meeting the agreed monthly repayments according to the current restructure arrangement.
Table 2 shows the percentage of restructured accounts that were deemed to be meeting the terms of their arrangement at end-June 2020, broken down by arrangement type.[9] The figures show that of the total stock of accounts in the arrears capitalisation category, some 20 per cent of PDH accounts are not meeting terms of current restructure arrangement, i.e. the arrears balance has increased since the arrangement was put in place. As the figures in Table 2 only reflect compliance with the terms of the current restructure arrangement, a higher percentage of compliance among shorter-term restructures could be expected.
Borrower Engagement and Legal Status
To assess the current level of engagement across all lenders, data on the classification of arrears by those restructured, and those ‘not co-operating’, are analysed, including whether legal proceedings have been initiated.
Figure 3 below, illustrating PDH borrower engagement by arrears cohort, shows that the higher the arrears accumulated, the more likely it is that a borrower is not in a current restructure arrangement, and is classified as not co-operating. Of the 26,228 PDH account in arrears over 2 years, 10 per cent (or 2,540) of accounts have a restructure arrangement in place, while 44 per cent (or 11,551) of accounts were not in a restructure but were classified as co-operating. The remaining 46 per cent (or 12,137) of accounts were not in a restructure nor co-operating with their lender, and legal proceedings have been issued in just over half this ‘not in a restructure nor co-operating’ cohort.
Legal Activity and Repossessions[10]
The enhanced data allows us to view the legal status of mortgages in arrears and for how long accounts have been in the legal system. For the majority (or 61 per cent) of PDH accounts in arrears ‘no formal demand’ has been issued, while 9,297 (16 per cent) are currently part of the legal process, which includes cases at Civil Bill lodgement stage, or where the case is still in the courts system (Figure 4).
Of these cases currently in the legal system, the majority (6,511 accounts) have been in the legal system for over 2 years, with some 2,595 of those accounts in the courts system for over 5 years. 1,060 accounts have been in the legal system for between 1 and 2 years (Figure 5).
During Q2 2020, the Courts granted an order for repossession or sale of the property affecting 44 accounts. A total of 30 properties were taken into possession by lenders during the quarter, down from 64 properties in the previous quarter. Of the properties taken into possession during the quarter, the majority of properties, at 28, were voluntary surrendered or abandoned, with the remaining 2 repossessed on foot of a Court Order. During the quarter, 85 properties were disposed of by lenders. As a result, lenders were in possession of 837 PDH properties at end-June 2020. During Q2 2020, there were 254 mortgage accounts where legal proceedings concluded, but arrears remained outstanding.
Residential Mortgages on Buy-to-Let Properties
Arrears
At end-June 2020, there were 100,114 residential mortgage accounts for Irish buy-to-let (BTL) properties, with an outstanding balance of €16.3 billion. Some 16,088 BTL accounts were in arrears at end-June, a decrease of 685 accounts or 4 per cent over the quarter. Of the total BTL stock, 13,556 accounts or 13.5 per cent were in arrears of more than 90 days (Figure 6), reflecting an increase of 0.6 per cent over the quarter. The outstanding balance on all BTL mortgage accounts in arrears of more than 90 days was €3.5 billion at end-June, equivalent to 22 per cent of the balance outstanding on BTL accounts.
BTL accounts in arrears of over 720 days numbered 10,171 or 63 per cent of all BTL accounts in arrears. The outstanding balance on these accounts was €2.8 billion at end-June, equivalent to 17 per cent of the total outstanding balance on all BTL mortgage accounts.
Of the total number of BTL accounts in arrears, 20 per cent (or 3,278 accounts) were overdue by between 2 and 5 years, while 31 per cent (or 5,023 accounts) were in arrears by between 5 and 10 years and 12 per cent (or 1,870) were in arrears over 10 years.
Restructuring Arrangements
A total stock of 11,522 BTL mortgage accounts were categorised as restructured at end-June 2020, reflecting a decrease of 790 accounts over the quarter. Of the total stock of restructured accounts recorded at end-June, 82 per cent were not in arrears, while 86 per cent were meeting the terms of their current restructure arrangement[11]. On the BTL side, the largest two cohorts of restructured mortgages were in term extensions and arrears capitalisation arrangements, which combined represented circa 40 per cent of all restructure arrangements. The data on arrears and restructures indicate that of the total number of BTL accounts that were in arrears at end-June, 2,096 (or 13 per cent) were classified as restructured.
Rent Receivers and Repossessions
During the second quarter of 2020, rent receivers were appointed to 57 BTL accounts, bringing the stock of accounts with rent receivers appointed to 5,035. There were 488 BTL properties in the banks’ possession at the beginning of Q2 2020. A total of 12 properties were taken into possession by lenders during the quarter. Of the total BTL repossessions in the quarter, 1 was repossessed on foot of a Court Order, while the remaining 11 were voluntarily surrendered or abandoned. During Q2 2020, 55 properties were disposed of. As a result, lenders were in possession of 421 BTL properties at end-June 2020.
Residential Mortgages held by Non-Bank Entities[12]
Arrears
At end-June 2020, non-bank entities accounted for 13 per cent of the total stock of PDH mortgage accounts outstanding. For BTLs, the proportion was higher at 27 per cent. Overall, non-bank entities accounted for 14 per cent of the total stock of residential mortgage accounts outstanding (PDH and BTL) at end-June 2020.
For PDH mortgages held by non-bank entities, 22 per cent of accounts were in arrears over 90 days, and 16 per cent were in arrears of over 720 days (Table 5). Non-banks hold a greater proportion of PDH accounts in deep arrears compared to banks, holding 56 per cent of PDH accounts with arrears over 720 days and 69 per cent of PDH accounts with accumulated arrears greater than ten years (Figure 7).
In terms of BTL mortgages held by non-bank entities, 38 per cent of accounts were in arrears over 90 days, and 30 per cent of accounts in arrears of over 720 days. Non-banks hold 79 per cent of BTL accounts with arrears over 720 days and 88 per cent of BTL accounts with accumulated arrears greater than ten years.
Non-bank entities held 19,538 restructured PDH mortgage accounts at end-June 2020. Of the restructured accounts, 83 per cent were meeting the terms of the arrangement. Non-bank entities held 3,412 restructured BTL mortgage accounts, which accounted for 30 per cent of all restructured BTL mortgage accounts. Some 74 per cent of BTL mortgages were meeting the terms of the restructuring arrangement.
Repossessions
Some 15 PDH properties were taken into possession by non-bank entities during the quarter, down from 25 in Q1 2020. Of the properties taken into possession during the quarter, all 15 were voluntarily surrendered or abandoned. During the quarter, 30 PDH properties were disposed of. There were 282 PDH and BTL properties in non-bank entities’ possession at the end of the second quarter of 2020.
Annex 1: Mortgage Arrears Data and Further Information
The mortgage arrears data, along with a set of explanatory notes, are available in the Mortgage Arrears section of the Statistics portal of the Central Bank of Ireland website: http://www.centralbank.ie/polstats/stats/mortgagearrears/Pages/Data.aspx.
The Central Bank of Ireland has produced a number of consumer guides to assist consumers who are in arrears or facing arrears, including
- Mortgage Arrears – A Consumer Guide to Dealing with your Lender;
- Mortgage Arrears – Frequently Asked Questions; and
- Guide to Completing a Standard Financial Statement.
The above guides, that include information on the protections that are available to consumers in financial difficulty, are available to download from the consumer information section of the Central Bank website.
Annex 2: Restructuring Arrangements
Forbearance techniques include: a switch to an interest only mortgage; a reduction in the payment amount; a temporary deferral of payment; extending the term of the mortgage; and capitalising arrears amounts and related interest. The figures also include advanced modification options such as split mortgages and trade-down mortgages, which have been introduced to provide more long-term solutions for customers in difficulty.
It is important to note that ‘meeting the terms of the arrangement’ is not a measure of sustainability, as not all restructure types represent longer-term sustainable solutions as defined within the Mortgage Arrears Resolution Targets (MART). For instance, short-term interest only restructures are, in general, not part of longer-term sustainable solutions. The MART sustainability targets also include a significant number of accounts in arrears which are part of a legal process. These accounts are not classified as restructured within the Mortgage Arrears Statistics. Arrears associated with such accounts are recorded in full in the data.
