Mortgage Arrears: December 2010

The latest quarterly report on mortgage arrears from the Central Bank is available here. The report shows a continuation of the steady increase in the fraction of mortgages that are more than 90 days in arrears. This fraction rose from 5.1% in September to 5.7% in December, in line with the previous increases over the past year.

For the first time, the Bank are also publishing statistics on how many mortgages have been restructured and the nature of these restructurings. In addition to the 44,508 mortgage accounts that were in arrears for more than 90 days, there are 35,205 mortgages that have been restructured but which are classified as performing and not in arrears.

17 replies on “Mortgage Arrears: December 2010”

Is there any point in repossessing a house in the current climate ?
I wonder how many banks could be classified as performing and not in arrears.

@ Seafoid: “Is there any point in repossessing a house in the current climate ?”

Absolutely not. But since the mortgage is Recourse – the bank could not care less. Now, if they had to secure the property, insure it, pay LA charges and put in a caretaker . . . !

Your second ? None.


If the bailout deal was restructured in such a way that we repaid interest only or less than interest this would be charcterised by financial markets as a default.
Hopefully the upcoming bank stress tests will recognise these restructured mortgages as effective defaults.

I’m pretty sure I saw a piece come past my screen earlier today (from RTE?) claiming that of the mortgages that had been restructured, well over 50% (65-70% ?)had since fallen back into arrears. If that’s true, then ‘restructuring’ is just a case of a sticking plaster on a gaping wound.

No doubt, as the figure continues to rise, we will eventually get that wonderful FF spin line that things are getting worse ‘less quickly’, ‘the rate of decline is slowing’, etc. It’s still getting worse; no matter how it’s dressed up. Plus ca change… etc.

Most people know at least 25 other people reasonably well (work colleagues, friends, etc.) so this means that on average, 1.5 of those people you know are in arrears on their mortgage. Of course if you move in rarified circles/ a cocoon (like some of those who claim they’ve only met one person in Ireland who was planning to look for a job abroad in recent months) then of course you won’t know anyone who is suffering.

Am I reading this bit correctly?

“of which almost €6.2 billion was owed on accounts more than 180 days in arrears.”

Are they saying their are 6.2 billon worth of mortgages that have not had a payment on them in 6 months?

There seems to be a categorising issue here that muddles the figures.
Surely when a restructured Mortgage then goes into arrears it should be moved back to the arrears pile?
Or am I reading that wrong too?

What’s the thinking behind adding no. in arrears of 90 days to no. restructured which are now performing ? should it not be no. in arrears plus no. restructured which have gone back into arrears to get a sense of what’s stressed ?


I believe Note 11 answers your query in that those loans that were previously categorized as Restructured which have since fallen back into arrears are included in the arrears numbers – but presumably also shown in the Restructured numbers to give readers an indication of the extent to which the originally restructuring exercise failed.

This is important because it suggests that c40% of the restructured loans fell back into the arrears bucket.

Now if restructuring arrangements are expected to be along the lines of what’s appearing on these numbers then the proposal by the Regulator are already an unmitigated failure.

Those of us who have been following this calamity for the past 6 years could have told the ‘wise’ men on the Mortgage Committee/Board/Group that this was already a forgone dead cert before they issued their ridiculous findings.

The only long term solution to this issue is debt write downs based on a long run yield method to establish the extent of the pricing error when the mortgage was signed.

The method is simple, its accurate, it stands up to any scrutiny as its based on the long run fundamentals in risk asset pricing and particularly property which our beloved banks forgot to employ in the period 1997 to date as the assumption that the structural shift in interest rates on Euro introduction in 1999 to a lower base was a permanent phenomenon – it wasn’t and we’re going to learn that the hard way.

Risk asset valuation mechanics did not adjust because of the introduction of the euro as to why our banks thought it did is still a mystery to me.

Please can somebody tell the Matt Pat & Co. on Dame Street that the biggest problem to the country’s economic recovery is Residential Mortgages. Stop pretending that the problem is going to go away. It’s not. Bubble markets do not recover. Strategies built on hope and prayers on asset price recoveries will fail.

Stop recapitalizing dead banks and use the earmarked cash to cover residential mortgage write downs and let the recovery begin. The answer to the economic woes is literally staring us in the face but economic orthodoxy and the issue of fairness to all is precluding the powers that be in putting a fix in place and moving on. We need a fix not a debate.

Mortgage arrears are like an iceberg on the horizon – the closer you get the bigger the berg – and with most of it hidden beneath the surface what we’re seeing in official stats hints at how big it will become.

The total arrears book of €8.625bn as % of total loans is now 7.39%.

Another €5.89bn or 5.0% has been restructured – so 12.39% of loans are in some degree of outright or hidden distress.

The total numbers of distressed loans amount to 79,713 – 35,500 hidden distress and 44,200 in official arrears.

Stats exclude the ubiquitous “buy to let” category.

@ Yields or Bust:

They DO know, but are sh*****g (metaphorically speaking) themselves. BH has an interesting analogy: Icebergs. Large heavy objects can float if their displacement is sufficient – their weight may be zero, but their mass is not. Not a good career move to attempt to arrest their progress – inertia and all!

Interesting times.


@Eomann Moran – “Surely when a restructured Mortgage then goes into arrears it should be moved back to the arrears pile?”

That’s what I keep thinking I’m reading too.

If I were the incoming Finance Minister, I would be very afraid of what’s going on here. Very afraid.

Where’s that nice property analyst economist Ronan Lyons chappie who sometimes contributes here? What’s he got to say? He can usually make more sense of these figures than most.


As indicated above Note 11 to the numbers states ‘…. Accounts that have been restructured but are currently in arrears greater than 90 days will have already been included in the arrears section of this return.’

Maybe I’m reading this wrong but this suggests to me that out of 59,229 restructured mortgages 24,024 are now back in arrears leaving 35,205 ‘Performing and not in arrears’ – I can only assume ‘performing’ for the 35,205 means perfoming in line with the restructuring arrangement not actually fully performing.

As indicated 24,024 of the original 59,229 ‘restructures’ i.e. c40% have fallen at the restructuring hurdle.

Maybe I’m reading this wrong.

Karl Deeters Blog is very informative.

John McHale, JTO and others who think we can get out of this without restructure/default.

Was this level of Mortgage arrears already factored into your equations? “6.2 billion in mortgages over 6 months in arrears”.
If not, does it push you any closer to the tipping point?
Is hope a policy?

@ all
Since Brian Lenihan was making decisions based on the best available advise isn’t it time that that advise got the sack and some alternative, best advice available, was availed upon.

Are any of the Academics waiting for the call up to join Peter Mathews in some sort of Economic policy think tank?

Comments are closed.