Q4 2013 Mortgage Arrears Statistics

The Central Bank have released the Q4 2013 update of their mortgage arrears statistics

For Primary Dwelling Houses (PDHs), 12.6 per cent of accounts are in arrears of 90 days or more.  This compares to 11.4 per cent of accounts in similar arrears in the unaudited monthly data for December published by the Department of Finance

The Department of Finance figures cover the six banks operating under the Mortgage Arrears Resolution Targets (MART) process.  These banks (ACC, AIB, BOI, KBC, PTSB, ULSTER) provide 90 per cent of mortgage lending in Ireland so it is clear that the remaining 10 per cent of mortgages (from the former BOSI and INBS as well as the various sub-prime lenders) have a far higher arrears rate – somewhere around 23.5 per cent.  The 90-day arrears rates for the INBS and subprime mortgages are greater than 50 per cent.

In today’s Central Bank statistics we see the total number of PDH accounts in arrears continue to fall and for the first time there was a decline in the number of accounts 90 days or more in arrears. 

However, the situation of those in existing arrears continues to deteriorate with yet another significant increase in the number of accounts now 720 days or more in arrears (31,834 to 33,589). 

On average the accounts greater than 720 days in arrears are just under €42,000 in arrears.  Across the statistics there is an average of roughly 1.25 accounts per household.

The outstanding balance on mortgages in arrears fell from  €25.6 billion to €24.4 billion of which €18.2 billion are in arrears of 90 days or more.  The total amount of arrears rose from €2.17 billion to €2.24 billion.

The total amount of PDH mortgage debt continues to fall and is now at €107.4 billion, compared to €118.6 billion when the series began in September 2009.  However, it should be noted that the release mentions “asset sales” that took place over the quarter but it is not clear what impact these have on the figures.  The sales refer to mortgages that were sold by one of the reporting institutions, and are therefore no longer included in the statistics.

At the of December there were 84,053 restructured PDH accounts and 79.3 per cent were deemed to be meeting the conditions of the restructure.  There is a new table providing these rates by each type of restructure.

Reduced payment less than interest only (4,264) and arrears capitalisation (18,516 accounts) are the worst performing restructures for PDH accounts.  There were only 14 accounts granted a permanent interest rate reduction.

As expected the number of split mortgages continues to grow rapidly.  It increased from 1,154 in Q3 to 3,268 in Q4 and, with 96.3 per cent compliance, it is the best performing restructure for PDHs.  This is likely linked to the incentives built in to the restructure.  There are likely to be many more split mortgages coming through as there are 9,722 restructured accounts classed as “Other” most of which are “accounts that have been offered a long-term solution, pending the completion of six months of successful payment.”

There were 63 forced repossession in the quarter and 105 voluntary surrenders.

Court proceedings were initiated in 1,491 cases.  Up to Q2 2013 the average number of proceedings issued per quarter was around 250.  This increased massively in the second half of 2013.  During Q4, 258 court proceedings were concluded and 82 court orders for repossession were granted.  Of the 176 concluded by other means it is  probable that many of these see the borrower and lender enter a new arrangement through a restructuring of the original loan agreement with others ending by way of voluntary surrender/abandonment.

Data on the Buy-to-Let sector are also included in both releases.

90 replies on “Q4 2013 Mortgage Arrears Statistics”

“For Primary Dwelling Houses (PDHs), 12.6 per cent of accounts are in arrears of 90 days or more. This compares to 11.4 per cent of accounts in similar arrears in the unaudited monthly data for December published by the Department of Finance. ”

Looks like permagrowth
Irish Permo growth, perhaps

A home represents a highly leveraged exposure to a single,stationary plot of ground,about the riskiest asset one can imagine. Property bubbles don’t grow out of thin air. They have a solid basis in reality,but reality as distorted by a misconception.

An important part of what happens during a property bubble is mediated by the marketplace,and by prices that are observed there and subsequently amplified by the broadsheet media. The broadsheet media weave stories around price movements,and when these movements are upward,the broadsheet media tend to embellish and legitimize “new era” stories with extra attention and detail. Feedback loops appear, as price increases encourage belief in “new era” stories, promote the contagion of these stories, and so lead to further price increases. The price-story-loop repeats again and again during a speculative bubble.

Ninety five per cent of all property sold in Ireland,is sold by surveyors/estate agents and they controlled where the property advertising money was spent. Almost all of this money was spent with the broadsheet media and the Irish Times,the owner of the property portal MyHome.ie, got the largest share. During the years the bubble inflated, the Irish Times revenue from property advertising was a substantial part of their gross income,and the surveyors/estate agents were allowed free rein with their puff pieces and property propaganda. Essentially this newspaper became the largest property market in the state with a newspaper bolted on.
The paper of record morphed into the paper of property.

Below is the link to the elementary property valuation error that bankrupted Ireland;


From my perspective it is clear that the overall mortgage arrears problem is no longer a prudential problem for the banks, it is more of a social and economic problem.

14% PDH mortgages >180 Days. Total arrears 2.2 billion. [Loan total 24 Bn]
25% BTL mortgages >180 Days. Total arrears 1.3 billion. [Loan total 11 Bn]

These arrears totals don’t amount to a hill of beans in the overall scheme of things.

Still is it hard to accept that there is an even hand being applied to both sets of borrowers, PDH and BTL. It is clear the the BTL sector is being shielded.

Buy to Lets:

Over 20,000 mortgages 1 year or more in arrears.
12,218 are more than 2 years in arrears.

From the Q3 report:

BLTs between 1 & 2 years in arrears 8,675.
BLTs over 2 years in arrears 11,597.

From the Q4 report:

BLTs between 1 & 2 years in arrears 8,092.
BLTs over 2 years in arrears 12,218

OK, so the general trend toward polarisation – shorter term arrears numbers reducing and the over 2 years increasing – is replicated in the BTL figures. Between these two quarters Over 2 year BTL arrears, increased by 621.

So we would expect around 600 or 700 repossessions/surrenders FOLLOWED BY SALES during a quarter just to keep the over 2 years figures static.

If the twelve thousand odd are to be cleared over time that figure would be many times more.

What action is in fact being taken in response?

Residential properties repossessed during quarter 24
Residential properties voluntarily surrendered during the quarter 45
Residential properties disposed of during this quarter 60

So 69 properties taken in by the banks and a mere 60 sold on to the market.

Leaving the banks’ ‘stock’:
Residential properties in possession – at the beginning of quarter 494
Residential properties in possession – at end of quarter 503

The deadbeat BTL numbers pile up by 621 (no action required, apparently) while frustrated first time buyers bid up target properties dramatically.

Meanwhile there is all sorts of shenanigans going on with ‘pressured’ sales by landlords…

Soooooooooooooooo many BTL in arrears… hmmmmmm….

How many renters are living rent-free?

Haven’t seen the landlords of Ireland up in arms about all these freeloaders ripping them off – therefore one must assume the freeloaders are the landlords – keeping the rent and screwing the bank.

Soooooooooooooooo little repossessions… hmmmmmm….

Maybe the banks like to be ripped off by freeloading landlords!

@grumpy Seamus has the PPR table above,equivalent BTL is pg 10,interesting ‘arrears cap.’ numbers:) h/t David Hall.
could not resist the 🙂 ok ok check out arrears capitalization,assume that simply increases the debt not already getting serviced but reduces the lenders arrears numbers:)
allsop’s inventory has been dwindling must be the protestors!

Slow progress. But progress nonetheless. The property price increases create an interesting dilemma for the freeloaders. Their main excuse for not paying the mortgage is slowly being eroded. Do they start to play ball in the hope of eventually returning to positive equity? Or do they carry on with the rent-free lifestyle. Nice to have the choice (and have the likes of Joe Duffy still weeping over their circumstances). Meanwhile the rest of us continue to subsidise their debt jubilee.

Can I raise the P + I > P issue again?

To summarise:
Banks create the money they lend such that every euro is born with a debt plus compound interest.
Banks delete the money they receive to settle of a debt. Hence reducing our personal and business debts does not leave the economy in a better position.

When the population is trying to pay back the principal plus interest of each loan with only the principal could this lead to some arrears problems?

I know someone is going to point out that, theoretically, since banks only delete the principal of a loan repayment and respend the interest in circulation it should be possible for all loans to be repaid. However given the extent of the arrears issues as described in the post should we not question this theory?

Forgetting about yesteryear and taking the present situation at our starting point, how can we expect to resolve the mortgage arrears problem? More money to repay mortgages can itself only be created by banks with a corresponding interest-bearing debt?

Finally, is there any reason why we couldn’t have the ECB create a significant portion of our electronic money base instead of outsourcing that role to the commercial banks?

This is the official government position, as outlined by Dear Leader Inda at the ard fheis last Saturday:

“The banks must also do more to help people who are in mortgage arrears.
That’s why we will require the banks to make sustainable offers to every family
in mortgage distress by the end of this year. We want people to keep their family homes. Repossession must be only the very last resort.”

Followed, as they used to say in Soviet times, by ‘stormy applause’.

@What goes up

It’s possible that quite a few BTLs are in the arse end of Leitrim and thus not producing much in the way of a rent roll…..

it is also very likely that a lot of the BTL are in the leafy burbs and are producing healthy rent rolls, lots of it taxpayper subsidised.

I see the landlords have formed their own 21st century version of the land league where the landlord is to be protected from evicition by the tax-payers representative.

I agree with JF, now is the time to move on the free loaders, whip the property from under them and sell to the next generation at market prices.

@ Ninap

An awful lot of BTLs down in Wexford .
Not much happening jobs wise down there.

Anyhoo, there seems to be little appetite to move on the freeloaders. And as prices creep up, the equation for banks and owners begins to change.

@Ninap, JF

There are plenty in Dublin.

Landlords are messing some estate agents around discussing or fake selling properties. Sometimes it is foot dragging so the whole arrangement is effectively an option with their choices dependent on how far the market bounces. Sometimes the bank does not know what is going on, sometimes the keys are with uncooperative tenants who are connected to the landlord – viewings can be ‘tricky’ while a connected purchaser appears and hey presto “sale agreed”, great price.

There is no doubt where the initiative lies.

Of course, there are no academic papers to demonstrate this sort of thing, so it cannot be happening.

Banks are going “sale agreed” on stuff then pulling out sometimes more than a year later – not exercising that put.

All in all the idea that anyone should have to sell real estate in Ireland seems to be as “unthinkable” as bank creditors taking some sort of hit.

Maybe it’s a cultural thing.

@ JG

That’s a very interesting link. Dublinwise Neg Equity would seem to be concentrated in the counties around Dublin- the people who were pushed out of the city by land hoarding during the boom, the Dubs supporters driving KE and MH cars, the ones who were the backbone of FF support during the Bertie era , the ones on v#lium now …

” If the voters of Meath East think they’ve had it bad over the last three weeks – assailed from all angles by people with sympathetic faces and here-to-help smiles, it’s been horrendous for politicians. They have been enduring a doorstep diet of unremitting reality through stories of quiet desperation from a once-gilded generation.”


It’s actually very loud desperation. The only voices we get to hear are from these characters. They have families you see, and family homes, unlike everyone else presumably. The quietly desperate types are the people who refused to buy during the boom, waited for their judgement to be rewarded, and instead have had to foot the bill for those who drank the kool-aid.

There is a great quote from a renter on the propertypin:

“Someone, somewhere, is watching telly in my house. They are not paying the mortgage, and they need to get out of my house. So that I can have it. I will pay for it, and they are not paying for it. And I want them to get out of my house.”

@ Johnny

Don’t forget all the people who thought buying a few places would pay their pensions.

“The quietly desperate types are the people who refused to buy during the boom, waited for their judgement to be rewarded, and instead have had to foot the bill for those who drank the kool-aid.”

Poor them.

By all means flog the BTLs at market rates but there are 300,000 less people working now compared to 07 and the banks aren’t lending so don’t expect house prices to rise.

It’s a complete dog’s dinner.

But maybe Dan McLaughlin can give you some rose tinted glasses . I think he was on the Kool aid as well.


” There is a consolidation plan that should see the Government
deficit cut to under 3% of GDP by 2014 and this plan has
been approved by the European Commission

While Ireland’s debt to GDP ratio has increased substantially,
it still compares favourably with the Euro Area average
– Ireland’s gross Government debt at end 2009 was
€106bn, equivalent to an estimated 64.5% of GDP.
However this takes no account of the cash balances
held by the NTMA (E21.4bn at 31 December 2009) and
the assets of the National Pension Reserve Fund
(E22.3bn at 31 December 2009), which would result in
a net debt ratio of 38%
– Ireland’s gross debt ratio is projected to rise to 78% of
GDP in 2010 and to peak at 84% in 2012, still below
the Euro Area average which is forecast to reach 88%
in 2011

The actions taken by the Irish Government to stabilise the
public finances have been well received internationally
“What I have seen coming from Ireland has been quite impressive
in terms of adjusting to new circumstances without losing time
and not hesitating to take the kind of bold and courageous
decisions in order to put the economy back on its feet.”
Jean Claude Trichet, ECB President, January 2010

Expectations about the near-term outlook for Ireland have
improved, with the consensus forecasting a return to annual
growth in the second half of 2010. The median consensus
GDP forecast for 2011 is now 3% growth following a
contraction of 0.5% this year”

“Don’t forget all the people who thought buying a few places would pay their pensions.”

The ‘place’ never pays your pension – it’s the young person struggling to get on the housing ladder who pays it. Either paying you rent, or paying through the nose for an overpriced kip.

‘Buying a house to pay your pension’ sounds very nice in the abstract, when you eliminate actual living breathing people from the equation and pretend the pension fell off a money tree.

@ Johnny

” Buying a house to pay your pension’ sounds very nice in the abstract, when you eliminate actual living breathing people from the equation and pretend the pension fell off a money tree. ”

You could say the same about any financial asset.
And people did buy houses thinking they’d be able to retire off them. Still do in London. Just because it all went t*ts up it doesn’t mean their motivation never existed.

Leveraging up to the hilt to buy a 2nd home to rent out to some Polish subbie is not a pension plan. It is a gamble that has gone wrong. I am not sure why the rest of us should pay for it. After all, I don’t expect you to pay my Paddy Power a/c next week.

@ Tull

“Leveraging up to the hilt to buy a 2nd home to rent out to some Polish subbie is not a pension plan. It is a gamble that has gone wrong”

Who said the 2 were mutually exclusive ? Did anyone ever lose money on blue chip bank shares ? Pensions – the ultimate dumb money. Wall St loves to see them coming.

BTL are a great investment for the free loader . You have an income producing asset with obligation to pay back the principal or interest never mind any tax.
The conclusion of WGU is spot on.

“BTL are a great investment for the free loader’

Is that specifically in Ireland or just everywhere ?

Bonds were even better, Tull. You could buy Anglo for 25c and they’d pay you 100.

I think a lot of people who bought BTLs in Ireland during the madness thought it would be like London.


Certainly some people will tell you that Sean Dunne wanted to turn D4 into Knightsbridge.

It was rather unfortunate that Lehman Bros collapsed. Very few people saw it coming. Anglo got into difficulty


” Fitzpatrick thought Quinn was a “real 1960s Irishman. He was one of those hail fellow well met, ah sure I will go down there and play the old cards, five or six lads for 10 bob, or whatever it was. He was always producing all that and would be nearly blessing himself. Everything will be all right. He was very human but, I didn’t easily like him.”
On March 25th, 2008, the four men met again, this time in a room in Buswells Hotel in Dublin. The ongoing fall in the Anglo share price was threatening the Quinn business empire and the bank. At one stage Quinn and FitzPatrick were alone in the room.
“He was very close to tears. He could see what was happening.”

At some stage FF had to give up and bring in the IMF. Fianna Fail had always been known for their astute financial management so this was a real blow to their self esteem.

And then AIB got into trouble .


“The Irish Government’s decision to nationalise Anglo Irish Bank, together with a variety of other developments here, in the US, the UK and in other parts of the Eurozone, have all had a knock-on effect on share prices and have led to renewed uncertainty and speculation as to what is going to happen next. I can understand that seeing our share price drop severely is worrying and that you may wonder whether some of the speculation might be true.
Share prices continually rise and fall as a result of many factors and the present extreme volatility in the financial sector serves to exacerbate and exaggerate that process. AIB continues to be a strong, sound, internationally diversified organisation which serves a huge range of personal and business customers across a wide variety of sectors. We have the depth and strength required to manage our way through this period of uncertainty as an independent organisation and I believe we will do so. ”

AIB subsequently ran out of road. And Bank of Ireland was severely ill.

The people who backed the bailout said it would draw a line under the banking crisis and by 2010 growth would be 3%. NAMA was going to help.

Now it’s 2014. 300,000 people out of work. Mass emigration.

JohnnyF says it’s stupid to buy property and expect to rent it out but he also says anyone who thinks the green shoots of recovery are a mirage is a doom monger.

Some coherence would be preferable.

Loads of freeloading went on right, left and centre.

There just isn’t enough money to bail out the BTL crowd given that bondholders and PS employees had to have their claims met first.

But it’s hard to get the facts, isn’t it ?

Tull, Johnny F and WGU: How about you guys sling your slurry comments in the direction that they should go – toward those bank executives, regulator and government ministers that were actually in charge, and made non-decisions about the rise and rise of the Irish residential property credit bubble.

Such comments, whilst they may appear macho to you, contribute nothing of any positive value to what is, a massive financial redistribution of wealth (under legal duress), whilst simultaneously offloading all the risk and accountability onto the Irish taxpayers – and by extension their dependents.

That said, if there are some – and we know this for a fact, who are ‘gaming’ the system, then whose in ‘charge’ the? Oh! Yeah! That would not be the same teams – with new managers, new signings and wearing new strips, what caused the problem in the first instance. Naw! Not possible!

“Yeah, beat up on the victims – that will show them!” Actually, they might even get to ‘love’ their tormentors! Happens.

Please distract yourselves by attempting to estimate the levels of incomes needed that folk in negative equity would need, in order to pay off any arrears + the scandalous charges and penalties, and, then keep their original mortgage out of arrears until it is paid off.


ps: Third para seems to be missing last four words of a sentence ??

“[That said, if there are some – and we know this for a fact, who are ‘gaming’ the system, then whose in ‘charge’] should act, not complain.

One interesting feature emerges clearly from these tables – Irish mortgages are de facto unsecured loans. Another unusual aspect is that Irish mortgages seem to have as high or higher default risk than Irish credit card loans, the other big category of unsecured consumer loans. That is the reverse of typical international patterns, where credit card debt has higher default risk than mortgages.

Without a credit card it is difficult to book a week in Marbella, pay a restaurant bill or buy petrol for the Merc.
There is no such immediate negative consequence to not paying the mortgage on either the home or the investment. Now if the bankers figure out mortgages are unsecured where does the SVR go to?

@Gregory what discount would you apply to the pool off face value ?

The numbers do not even include the financially illiterate that were preyed upon by predators after getting bombarded with property porn by the govt/media/TCD profs,subprime.Gosh imagine trumpeting such a sketchy and sleazy product,even the CB wants no part off this “market”,why should IRBC borrowers get special treatment,GE borrowers didn’t !

@BWSnr,try average the price,buy one or two others today that will even out or diminish the negative equity,the govt. and govt. owned banks will probably support this plan,they have done everything else they can to inflate prices for the young or new entrants.

@ Johnny F

“The quietly desperate types are the people who refused to buy during the boom, waited for their judgement to be rewarded, and instead have had to foot the bill for those who drank the Kool-Aid”

Ask John Gallaher if he can get Janet to wind back the S&P to where it was in 1980 for you.

“Now if the bankers figure out mortgages are unsecured where does the SVR go to?”

Maybe they have already, Tull. Maybe they are expecting a second bailout.
Remember what JPM said back in 09

“Main uncertainties remain in place –
(ii) adequate capital levels, we maintain a long-term 8% core equity ratio requirement, (iii) who would subscribe future capital needs, with the government still seen as the main candidate in our view, (iv) fundamental prospects, which remain bleak given ongoing headwinds in terms of economic activity”

That is still valid, I believe.

Don’t forget the banks are losing 700m a year on trackers. 4*annual tracker losses would write off a lot of Negative equity. Who decides ?

Remember too the reassuring words of the analysts in 2010 that everything was going to be grand

Goodbody : Analyst: Eamonn Hughes

“Sustainable earnings power: Ahead of the capital issuance,
sustainable earnings discussions dominate our interaction with
clients. But as the Irish banks restructure and de-lever, this exercise
and its timing is complicated by a vast array of variables. In our view,
the funding mix and prevalence of tracker mortgages ensures the
margin normalisation process lags the pace of developments in the
UK banks by at least 12-18 months. So by 2014, we see: (i) net
interest margins move back to 2004 levels; (ii) non interest income at
mid-20s levels of total income; and (iii) cost/income ratios just north
of 50%. Also, credit should normalise at 55bps of RWAs. We see
normalised ROE’s reach 13.5% by 2014, with normalised net income
of €940m at BOI and €885m at AIB.”

Everyone is playing the game, it would appear . From Olli all the way down.
It’s all politics.

As someone entertaining the idea of buying a house in the near future these stats give me great comfort. Things have crystallised in my mind as regards home ownership recently, I had several concepts backward.

I thought being prudent was wise, but now I see that you have little to gain by being prudent. I thought being reckless and overextending was unwise, but now I see that being reckless actually comes with huge perks, the entire political establishment is agreed that you should be offered every chance to stay in your home, whether you pay the mortgage or not in the medium term. You gain several champions, such as David Hall, who will fight for your right to holiday and keep your kids in private school and obtain a split mortgage for your 3/4 bed in Clontarf.

I had it backwards, I see it now. My new and more sensible plan is actually to max out my mortgage approval (I only ever wanted to borrow 70% or so of it). There is no risk to doing this, if I get “in trouble” then I’ll start paying a reduced amount, or even the interest, and all right thinking people everywhere will agree that I should be allowed stay in my nice house in a nice area, and the bank will fold. It’s probably a split mortgage I’ll target, they seem to be flavour of the decade. There could even be a debt write down, who knows? I’m a nice guy and I have kids, and I engage with the bank when they call or write (not too often mind, but enough so that it would look good if I ever got before a judge)

All I ever wanted was to do right by my family, and that’s not a crime is it? Surely paying your debts and honouring contracts isn’t more important than family? Maybe I’ll consider going to a 4 day week in work, I’d like the extra time to be with my family, and seeing as paying the mortgage isn’t really a firm requirement I can probably get a reduction in repayments right there by 20%. Less work = less repayments, see?

I had it backwards, I know that now. And while I probably will feel bad that my behaviour in turn forces costs onto the good, prudent citizens who still hold onto quaint notions of responsibility and paying debts, I don’t really see an alternative that doesn’t result in me being the butt of the joke and paying 350k to live in an ex-council house in Drumcondra.

It is far better to aim high in these matters. Remember, when it comes to buying property in Ireland, it’s the taking part that matters! There really are no losers among the home-owners of Ireland.

@Brian Woods Snr

I’ve railed against the slightly dim, ex-rugby players, the Comical Lenis and the Comical Mickeys of this world – feel free to browse:

But the banks and the politicians had a willing accomplice in the greedy Irish gobshite.

I bought and sold in London and when we moved back in 2007 I couldn’t get my head around the prices people were 1)borrowing and 2)paying for property (both here and abroad… anyone for the last Bulgarian duplex now?) I’ve rented ever since. I can happily tell you from the other side of the fence, that the landlords in Ireland have not only had their cake and eaten it, they’ve had a good chunk of mine as well!

How many of those now using the “Beal Bocht” would have surrendered their super profits to a 100% tax had the bubble continued to expand?

A lot got caught on the wrong side of the deal – but instead of going bust, have held onto their overpriced “entitlement”. Sounds very much like those slightly dim, ex-rugby players!

BTL Landlords have had an easy time simply because the idiots in government have tied the fate of the country to the fate of the banks – so the only way to save themselves is to try and re-inflate a burst bubble. The flipper/reluctant landlords have simply buried their heads in the sand up to now, but are starting to raise their ugly heads again, now that the talk is of prices increasing. Hooray!

How pathetic a country do you have to be to decide that the only good economic policy is the one that made you broke in the first place. There’s a phrase for this… it’s called “Gambling for Resurrection”! It’s what bankers do when they’ve lost so much money that they make bigger bets (and lose even greater amounts of money!) to try and get out of the hole they’ve dug for themselves.

There are a lot of people who deserve opprobrium for their actions during the bubble – Irish landlords/flippers are just as guilty as the bankers and the politicians.

Those daily Aer Lingus flights to New York didn’t fill themselves you know!

@Gregory, Tull

Ordinarily the unsecured nature of lending in the Irish mortgage market would push up mortgage rates through the ‘analytical channel’. This might still happen wrt securitisations, although the implicit, sort of/maybe, state guarantee (remember the official version of history is that these were not an error) could reduce the effect.

What remains on the Irish banks’ books should require higher rates via credit risk to funders. While property prices are going up you can imagine everyone including investors simply ignoring the question, but as and when they stop, it will be very tempting for politicians to verbally intervene to attempt to place the tax payer between the bank’s creditors and an upward re-rating of risk.

To do otherwise, and have rates forced up, would be seen as failing to support people getting their foot on the property ladder etc (read: property owning political base).

Excellent unemployment data today lads! Rate below 12%, headline number below 400k. This Enda fella is a lot smarter than he looks.

“12.6 per cent of accounts are in arrears of 90 days or more”

That’s probably bigger than what the Labour party is polling at the moment. Could be a big election wedge issue if people got thinking.

” Excellent unemployment data today lads! Rate below 12%”

Very hard to excited about 12%, Johnny
Goodbody’s were projecting way less back in 2010. What happened ?

@ Johnny F: Number of pointers.

The actual numbers of persons in the 18 – 66 age cohort: the labour force being a sub-sample of that cohort. There is less variation in the former, than in the latter. Variation can exert a ‘nasty’ effect on estimates – it reduces their statistical reliability. Should have a “CONSUME SENSIBLY” label on the box.

There are three metrics (maybe even a fourth) being deployed to estimate the employment (or un-employment) numbers. This is completely daft: economically inefficient. Its a joke? Right?

And please, no government is ever responsible for employments (outside of the public service). In a consumer economy (we are one of those, yes?) it is DEMAND. And demand implies both a willingness and ability of the demanders to spend their disposable incomes into the economy.

Now, please remind me that ‘Austerity’ – whatever that may mean, DOES NOT result in less persons in waged-labour employments and lower disposable incomes. Naw! Not possible!! Excellent!!!

As I cautioned: “Consume sensibly”.


From the RTE website, ‘The Live Register figures, however, do not include the 85,028 people who are availing of programmes helping the long-term unemployed return to the workforce.’

How is R***** B****** still in charge of Bank of Ireland ?

Apr. 16. 2010 / 8:30AM, IRLBF.PK – Bank of Ireland Update on discussions with the European Commission in relation to EU Restructuring Plan
Conference Call

Stephen Lyons – Davy Stockbrokers – Analyst
Morning. I’m just wondering how the announcement today in terms of business disposals, will they impact on either the current
year’s earnings, and are you still confident of meeting those targets you outlined post your ’09 earnings in terms of your net
interest margin, cost income and low double digit ROE in 2013?

R***** B****** – Bank of Ireland – Group Chief Executive
We don’t believe that they will enter — will impact adversely on the guidance we’ve provided in 2013. I think we — I think I’ve
tried to indicate the contribution that the divestment businesses made to operating or pre-impairment profit in the nine month
period to the end of December, and I think I said that I wouldn’t have a problem with people modeling that going forward.

And for how long are people going to take baseless optimism at face value ?

May 26, 2010

Company update
Bank of Ireland
Price: 67c
Attractive restructuring story lost in
the headwinds

“Attractive restructuring story lost in the

Following the recent recapitalisation announcement from BKIR, we
issued a research note, “Bouncing back on ‘bullet-proofed’ balance
sheet”. Since then, the stock has fallen 37%. Given that BKIR has
addressed many of the risk factors that others have not yet tackled, we
believe this decline is unjustified.

In our previous note, we commented on how a number of uncertainties
had now been removed:
· NAMA – discount on loans set at 35%;
· Non-NAMA impairment losses – reaffirmed prior €4.7bn throughthe-
cycle guidance and added that impairment losses peaked in Q4
2009 and will reduce progressively;
· European Commission response – core businesses in UK and Ireland
left intact;
· Regulatory capital requirement set at €2.6bn – BKIR is raising in
excess of this amount;
· Economy – signs of stabilisation (see our research note, “Economy
finally out of recession; sequential real growth of 1% probable for next
few quarters”, issued April 28th).
These clarifications helped to underpin the investment case and suggest
that BKIR is best positioned to play the banking recovery story in
Ireland. This is helped by the marketplace dynamics (see chart below),
where – alongside ALBK – BKIR is writing up to 40% of new business
across various product lines. As credit flow recovers, this market position
will be supportive of margin recovery.”

Credit flow is still FUBR
And unemployment is still at 12%.

Anyone can sell that Brooklyn Bridge.

@grumpy here ya go.
“The impact on RMBS transactions from potential losses through partial write-offs of split mortgage debt is already captured in our current RMBS criteria, which factors in the prospect of greater losses through loan foreclosures. Regarding mortgage covered securities programmes, the covered bond pools are dynamic and loans three months plus in arrears are removed on a regular basis in outstanding Irish programmes; therefore three month plus arrears would only occur in the cover pools post issuer insolvency.”


I think Gregory’s point is a fundamental one about the continued use of those initials. RMBS conveys a fairly precise meaning.


Very hard to excited about 12%, Johnny

Ireland is not Iceland (6.1% unemployment rate) but we are still better off than Spain (26%). In Germany’s Europe the best we can hope for is that the situation becomes unmanageable more quickly elsewhere and provokes a policy change.

What gives me hope is the record high unemployment in France (11%). The spin is that the rate of increase in unemployment is dropping. Surely it can not be long before the French lose patience with the restrictions of EMU and unequal partnership with Germany? Their elites may be invested in the Euro and a place on the world stage but France is five republics down already – why stop now?

@grumpy given that AIB/BofI have just reported rather stellar numbers,assume its TSB that you have on your mind making you rather “grumpy’ or am i missing something?
TSB got Fastnet9 off,500 mil jus before holidays at fairly decent spread-no govy guarantee or hand holding,never was never will be,no widows orphans.
here cheat sheet.
just as interesting from link above appears a rather rare and unusual borrower may just may have turned up…..no no say it aint so.
“The process of moving some borrowers onto a new product will need to be managed carefully to minimise the potential for other borrowers to go into arrears in expectation of write downs, or for those who are already in early arrears to try to obtain this type of debt workout. Affordability has been the biggest driver of Irish mortgage delinquencies, but we believe that borrower behaviour has also played a role. This risk is partly offset by the greater sanctions available to Irish banks since last year’s changes to the Code of Conduct on Mortgage Arrears and the Land and Conveyancing Act made enforcement and foreclosure more viable.”

the other benefit which is rarely mentioned is that debt forgiveness is taxable.


Maybe you are. Forget about current pricing – write downs are visible and its a post property bust legacy market with everyone aware of the arrears data and a rapidly rising current market Dub-centric. Instead, imagine a few years hence when possible declines and neg equity might be considerations back on investors’ radar. The fact that ‘mortgages’, demonstrably, have underlying security that is effectively merely theoretical in Ireland should then be a relevant factor in pricing.

An interesting question would then be whether to allow the consequent higher rates, or move to make Irish mortgages ‘security enforceable’, or bridge the gap between perceived risk and politically acceptable pricing of it by implicitly laying some of it off – to the state.

“The fact that ‘mortgages’, demonstrably, have underlying security that is effectively merely theoretical in Ireland ”

Is it not linked to the scale of the problem in Ireland, Grumpy? I read something a while ago in the FT that Ireland was ahead of the pack in declaring bank losses but didn’t have a plan to distribute them which lead to the Troika coming in and imposing the bond holder bailouts. If you look at some of those 2009 analyst projections with permagrowth coming back 3 years later debt was going to peak at 88% – now it’s closer to 140% I think.
And then the PS was never reformed- another drain , trackers another – now there is no money left.
So they are just sitting on the problem.

None of the solutions worked. Trichet was probably the worst offender but NAMA was pointless – and here we are in 2014 with interest margins still banjaxed, growth anaemic and banks nowhere near full health.

What would Jesus do?

You know the standard blurb that goes with mortgage ads – “your home is at risk if you do not meet your repayments” – in Ireland it’s more like “The solvency of your country may be at risk if enough of you do not meet your repayments”

@john gallagher — Keep in mind recourse vs nonrecourse is entirely different from secured vs unsecured. The US does not have any states with unsecured mortgage loans so there is no comparison case.


Speaking of ‘mortgages’ worth remembering the waiting lists for ‘social housing’, how these have increased over the krisis >60% and how building of social housing has declined by >80%

Michael Taft: “There are nearly 90,000 households in need of social housing. These households make up approximately 170,000 people. 60 percent have been waiting for two years or longer and since the start of the crisis, the numbers in need have increased by 60 percent.

[T]he numbers in housing need have increased by 60 percent and social housing output has fallen by 82 percent (2008-2012).”


Of course, most mortgage holders and landords may now also be classified as ‘local authority tenants’ or ‘state tenants’ …. tenants of the proxy-sov which has been forced into hock by the EZ ideologues in power.

What would happen if everyone stopped paying the mortgage?

What would happen if local authority tenants and those foisted off onto landlords stopped paying the rent?

p.s. Blind Biddy is still in Kharkov.


We have demonstrated that where there is sufficient herd behaviour / correlation in arrears the recourse will be adjusted downwards, so in a macro downturn there is a bit of that. But the really interesting aspect is that lenders cannot assume that they will, in practice, be in a position to enforce their security – so why should the low rates associated with secured lending fully apply?

Even with several years of arrears, even speculative buy to let borrowers will not have the property securing the loan repossessed and sold to a willing buyer. End of. It is ‘mortgage’ finance not mortgage finance.

Where are the other unsecured real estate lending markets? Genuine question.

@John Gallagher

“given that AIB/BofI have just reported rather stellar numbers,”

You are being serious?
I hate to spoil the upbeat mood, but AIB results do not look good to me.

1. They have restructured the organization into three units: DCB (Domestic Core Banking), AIB UK, and FSG (Financial Solutions Group).
The FSG group is effectively another NAMA (‘ANAMA’), nested within AIB, a bad bank with a bad bank. It has gross loans of €21.8 billion, of which €18.3 billion are impaired. Provisions against these of €11.6 billion.
Total loan approx 82 billion, therefore ~25% gross of all loans have been sent to the ANAMA. Remember ANAMA does not get its funds at cheap rates, like NAMA.
As a business unit structure, for one of the pillar banks, it sounds awful, apart from anything else.

2. AIBs strategy is still driven by the need to pay bank ECB funding (Refer to page 36 of the annual report). AIB boasts that it has reduced ECB funding by €9.5 billion or 43%.
I simply cannot understand how the ECB has been both willing and able to implement such a destructive deleveraging process on Ireland, and why the Irish government and AIB have complied so readily to the dictates of the ECB. So only another 9.5 billion to go, even though AIB say they have finished their deleveraging targets last September, it is clear that they see paying back the ECB as business priority number one.

3. It’s net interest income is still extremely poor. €1.3 billion on 117 billion of net assets 1.1%. NAMA probably makes more than that much on less than 30 billion of assets. Maybe we are shooting the wrong horse.

4. One final point, take a look at note 27 just to see who is getting write-downs.
Residential Mortgages: 87 million
Other personal:114 million
Property & Construction: 296 million
SME / Commercial: 456 million
‘Corporate’ (whatever that is): 181 million.
Total write downs 2013: 1134 million

So the debt write downs are not in the RMBS. The big write downs are going to the bigger fish.

Altogether, not so impressive, IMHO.

@Gregory Conner,Hi Gregory hope your terrific paper on SD was well received it is excellent work,perhaps you would provide a link,i only read the working or draft paper and it was great.
Now now are you spending a bit too much time with the Jesuits,the collateral has not vanished perhaps the value has fallen but they ain’t making any more dirt.Yes a few roadblocks to securing said collateral but often times the costs and delays especially in Irl with route 1 is more expensive than a negotiated deal.Looking at about 3 years in NY to get the gaff too!
Will provide a link on timing but btw meetings now,well actually supervising a few evictions nothing like all that gear the detritus of a family on the sidewalk walling children…actually early in my career did a few never again ain’t for the faint of heart evictions.At the top of the market irish RMBS represented about 5% of the euro mkt no one really cares,they just don’t.

@grumpy that’s a oxymoron as you are well aware it’s asset backed lending,the asset is still there.HELOC home equity lines of credit are “secured” but today trade for cents on the dollar,mezzanine loans too.

@Joseph you guys are paying peanuts,in the FIRE economy you get what you pay for.They are great results given the handcuffs on senior executives by financially immature owners.
Will break them down for you later great work by AIB management,hopefully you will get headhunted and properly rewarded.
Apols on the iPhone.

fyi text from Blind Biddy in Kharkov:

At the end of ‘Lukoil’, when the mourners are asleep after three days of drinking, Kolya wakes in his grave, climbs out, walks up to his sleeping friends

and very quietly,
so as not to wake them,
steals a Nokia phone charger,
and returns to hell and to his blondes.

It’s these twists that make Zhadan a curiously hopeful, almost utopian writer. His newest book is called Mesopotamia (Kharkiv lies between two rivers).

Last week, Zhadan and another hundred or so pro-Majdan activists stormed the regional government building and barricaded themselves inside.


An interesting report from Suzanne Lynch in today’s IT.


Perhaps the most interesting aspect in the context of this thread!

“However, it noted consumption behaviour of only 10 per cent of Irish households is directly affected by mortgage arrears resolution.”

This is good news in terms of the overall economic impact of mortgage arrears but not, however, in political terms as the households in question constitute an important voting block and the sentiments they hold extend well beyond them.

(The Commission paper referred to is not, it would seem, available on-line at this point in time).

@DOCM,the most egregious part of this whole “debate” is the non separation of data on Buy To Let and Principal Private Residence.
They really should not be in the same report,in NY lots of offshore investors and locals too have purchased apartments/flats to rent out as a put on the housing market.Yet I’ve never heard nor come across any research or gnashing off teeth if they fall behind in serving/paying the debt associated in placing this wager/bet.The collateral simply gets taken off them or they voluntarily surrender it.
Over here it’s extremely difficult to secure high leverage loans on second or third “homes” as they are not owner occupied,it’s treated from the start as an investment and its non emotional.One suggestion for Irl would be that going forward there is a cap or better yet all BTL mortgages are non recourse,the lenders remedies are limited to repossessing the property.This should also be non judicial-fast track the resolution process.
BTL can be a decent investment but the mistake many buyers made was in factoring in supposed capital appreciation into the numbers.A BTL should carry itself,in a good BTL investment the rental income exceeds the mortgage and other costs,feeding them is not much fun.

Some numbers on repo/foreclosure.
“Despite a 4 percent decrease in the average time to complete a foreclosure from the previous quarter, New York continued to register the longest state foreclosure timeline at 1,049 days from foreclosure start to bank repossession (REO). New Jersey came in second highest at 1,002 days followed by Florida at 893 days, Hawaii at 824 day”


@DOCM thanks for IT link,last night Charlie Rose had Henry Kissinger on,worth a look,ABC news was just reporting that Crimea is to hold a referendum shortly.Regarding the EU and Ukraine if you like it put a ring on her finger,you can’t keep dating forever,the financial aid package is derisory buy the place it’s for sale!

@ DOCM: DOCM, I credit you as being a sentient being!

Those ‘estimates’ are just that – estimates. They are virtual values computed, in some fashion, from real raw data. And it is with the latter that the problem may lie (apols for that Freudian!) – that is, the sample may not be random. There is of course the identity of the item being measured: what is its quantitative (or perhaps qualitative) relationship to the datum values being used to compute those estimates?

And as I have mentioned on a few occasions – the little matter of the ‘Meaningless Mean’. But as my grandmother used to intone – as she read her morning paper, “The paper never refused the ink”. She was mighty fond of ‘An Cruiskeen Lawn’!

Caveat lectors! And consume statistical estimates, sensibly!

My op: Irish residential properties are still overvalued’ – by 50%, plus-or-minus, depending on nature of property and its location.

See if you can ID a median income for persons in full-time employment. Multiply that by 3. This shuld give you a ‘quick-and-dirty’ estimate of the likely median residential property (home) value. Urban values will be higher; ex-urbs and rurals lower. Lots of pieces of string; all of indeterminate lengths!

[ps: It would be more valid to use (monthly rental income x 10)/ 0.07]

@ jg: The mortgage horse has bolted! Could you get a few cow-hands from Wyoming to come over here and see if they can lasso the beast, then hobble it!

Kissinger! I thought he had been dispatched to the Funny Farm. Think someone should recommend some reading to someones – like; ‘The Best and the Brightest’ [David Halberstam]? Or, ‘A Bright Shining Lie’ [Neil Sheehan]? Kissinger was one bad ass.

@BWSnr,the best and brightest is a great read,i think i’ve read all off david’s work.
Yes the mortgage mess deserves a farmyard analogy,more like the donkey bolted.The biggest issue which Gregory has wonderfully studied/illustrated on here and in other papers is the lack of a good stick,and the resultant impact on borrowers little too much carrot!
Henry is still held in very high esteem i thought DOCM would enjoy his musings.


@JC congrats on the senate vote thats great news,thank you for the link i had read it but its been a while,i was always curios why a Labour AG disagreed here as they had received legal advice prior to promising too abolishing UORR,oh well hopefully they will go the way off the PD’s and The Greens after breaking so many pre-election promises.

@Joseph im reading the AIB report now theres always one,tks.

@ jg

Thanks for the link to Charlie Rose and Robert Gates! (I cannot be bothered with Saakashvili).

I think it was Bernard Shaw that said that the US and – English speaking – Europe were divided by a common language. Gates is looking at the matter from a completely American point of view and his conclusions may be correct from that point of view but do not correspond with the European reality. This opinion IMHO is much nearer the mark.

“Support for Yanukovych and repeated Russian calls for ruthless suppression in Kiev reflected Putin’s concern at risks to the Russian status quo. It is the example and ideals of the West, however imperfectly realised, that is the threat to Putin and his system, not some cunning US or European plan.”


Putin has already lost as far as the Ukraine is concerned whether he continues on his present path, halts (the most likely outcome) or reverses course. More or less the same point was made by a former EU adviser Robert Cooper on RTE just now.

On the BTL issue, the argument advanced is that many saw these investments as their pension and, if I am not mistaken, most owners have only one property. Dealing with them is a political not an economic problem. (Seamus Coffey has posted the Commission report on a new thread. He does not have a high opinion of it).

@DOCM on the BTL issues the loans are crossed in that the borrower is responsible for any loss on the BTL and his PPR.
In order to keep the PPR numbers ‘decent’ subprime is excluded,rent has to be getting diverted form BTL towards paying PPR debt.Thats the only explanation as the vacancy rate/factor,rent growth, does not support that level of non pmt by BTL owners,but they may simply be keeping it somehow i doubt that,i think its servicing debt just not the BTL’s.
On Ukraine there appears to be a ‘delay’ Henry as on last night the interview may not be up on Charlie’s page yet.I tend to avoid commenting on PPR as its truly none my business i ain’t paying any taxes in Irl any time soon.Foreign Policy also not really my area of expertise interested in CG’s opinion but so far nothing,he did have a great ST article last weekend on housing,which i know a little about!

@ JG

The bottom line as far as I can see, from the point of view of someone not versed in the actual statistics, is that the problem in personal economic terms – whether PPR or BTL – impacts a lot less people than is generally thought.

For the politicians, the PPR issue is one of emotion and the BTL one of powerful lobbying by many small investors – and some not so small – in all the recognised parties.

On the Ukraine, Kissinger makes more sense than Gates. Indeed, his proposal for the “Finlandisation” of the Ukraine has also been advanced by Zbigniew Brezinski and also makes superficial sense; until one compares the size and geographical location of the two countries.

The IT has dramatically upped its game in terms of coverage in recent days cf. this analysis.


@DOCM part of the ‘problem’ is the antiquated bankruptcy laws in Irl.
Regarding the impact there are two,financial and behavioral.
The financial impact has happened,its not a ‘good’ idea for large swaths of the population to get used to not paying their debts without consequences.
Its with some irony that i watch the IRBC borrowers looking to have ‘protection’ from US vulture funds.They simply want make a return,they have no qualms about debt forgiveness,negotiating deals.
I dislike actually loathe “pepper’ give me any off the US funds to deal with they will cut deals left and right,pepper are bad actors.They paid cents on the dollar for these loans,the borrowers should get organized and go on a payment strike for a better deal…

“If we find a solution now we can avoid a serious problem in the future. This will save time and money. We cannot write off your loan, any arrears or any additional interest that might build up. But we can help you get back on track.”

eh why not you paid buttons for them?


Thanks – but that just refers to a “recent study carried out by the Commission services” – and contains no data – so no joy there.

Interestingly though it’s price-rent ratio suggest the opposite to the IT report – “…a bit above it (the long-term average) suggesting house prices may not be so cheap.”

The IT seem to have selectively quoted.

It’s also interesting that in an era of ZIRP they caution – “These ratios have certain caveats in providing accurate estimates of imbalances. For example, they do not take into account changes in interest rates over time which can change the equilibrium level of house prices.”

Seems legit!

Anyways, the hunt continues to try and find the data underlying this 13% number.

whether it is putin, who has lost it here, the judgement is still a long way out.

When you look at 2 interesting greek links:

http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_1_06/03/2014_537936 (The IMF vs Blackrock side story is actually interesting as well),

but much more important the poland/ greek /bulgaria side story of the gas supplies:


together with the FT news story, that the US sent a carrier (USS George HW Bush) fleet into the black sea

but when you skriek back and take a closer look, it is just the USS Truxtron, and it has a time limit of 21 days, according to the montreux convention, unless they fudge some involuntary mooring, like with the USS Taylor

@ JG

“Joseph you guys are paying peanuts,in the FIRE economy you get what you pay for”

How much do the head honchos at Morgan Stanley get paid to deliver 10% RoE ?


“However, it noted consumption behaviour of only 10 per cent of Irish households is directly affected by mortgage arrears resolution.”

Only 10%- say they were all turfed out. Where would they live ?
Does the market have that sort of capacity? Would it be like musical houses ?

@seafoid these guys can’t chew gum and walk at the same time.
“After Kellogg, the highest reported base salaries for new MBAs were $350,000 at Wharton, $310,000 at Columbia, $260,000 at Duke University’s Fuqua School, and $250,000 at Chicago Booth”

Looks interesting h/t IT.

@ Joseph was hoping cut and paste an equity analysts review of AIB,surprisingly limitled coverage so despite my delay tactics will have read the fecking thing!
It’s beside my elbow but will read and comment,Seafoid is determined to not let this tread fade into obscurity…

As requested

Ireland First a group of seventeen influential Irish business experts which included Frank Flannery and Angela Kerins, lobbied to prevent the government banning upward-only rent reviews in existing leases. This lobby was successful. On the sixth of December 2011 Michael Noonan announced to the Dail they were dropping this reform.

In an article in the Sunday Independent dated 13th March 2011 by Ronald Quinlan headed ” Nama will hinder recovery business experts warn”it states;
“Outside of Nama’s remit, but still in the area of property, the same source said the new Government needed to move to end the uncertainty surrounding the future of upward-only rent reviews for commercial premises. Under the Programme for Government, the Coalition has given its commitment to end upward-only rent reviews for existing leases.
Commenting on this, the source said: “The rent review issue has to be addressed now. The uncertainty surrounding this is having a serious and direct impact on our potential to attract foreign direct investment. Nobody wants to put their money into commercial property in a country where the goalposts can be moved overnight.”
It is understood that the co-chairs of Ireland First — One 51 chief executive Philip Lynch and Rehab chief executive Angela Kerins — will lead the various delegations once meetings can be agreed with Taoiseach Enda Kenny and the Government.”

Apols for this somewhat tardy reply.

@ PUSkelton: I somehow missed your 5th March piece. HS had a short comment on another thread which pointed back to it.

Your comments ‘sound’ awfully naive – or are you being cynical? The situation in respect of the genesis of the 1995 – 2000 and the 2002 – 2006 Irish residential property price explosion needs careful analysis – and this has been done by both myself and a few others on this site. It should not be necessary to repeat our comments. This comment (last sentence in your 5th March piece):-

“There really are no losers among the home-owners of Ireland.” – is flat-out incorrect.

@ WGU: “There are a lot of people who deserve opprobrium for their actions during the bubble – Irish landlords/flippers are just as guilty as the bankers and the politicians.”

WGU, your previous comments indicate that you do indeed understand what happened, and what is happening (wrt: the residential property in Ireland), but this, however, simply fails the ‘sniff test’.

“There are a lot of people who deserve opprobrium for their actions during the bubble – Irish landlords/flippers are just as guilty as the bankers and the politicians.”

The Irish residential property mortgage lending fiasco started with incompetent executives in the respective lending institutions. I use the term incompetent, as I have formed that opinion on the basis that prior to 1995 or so, the majority of the lending institutions were operated in such a manner as they remained solvent. But all this changed in decade.

The major Irish residential property lenders were ‘driven’ to shocking levels of insolvency by their respective senior executives (an presumably with a nod-and-a-wink from their respective boards). Please explain to me how a prospective borrower could have influenced the actual decisions made at both board and management levels in our now insolvent residential mortgage lenders. Please, please – explain this to me.

It simply beggars belief, and insults what little intelligence I possess, to assert, posit, allege (or whatever passes for sentient judgement these days) that shareholders, bondholders and prospective borrowers, deliberately, both individually and collectively or in concert, had any hand act or part in the mortgage lending decisions made by the ‘lending committees’ of the different lenders. They had none.

Mind you, our Financial Regulator (at that time) appears, by his own admission, to have been incompetent also. And the roles of our incompetent politicians, both government and major opposition parties were deplorable also – but at least they can conjure-up the ‘excuse’ that if they had done a Morgan Kelly, they would have been wiped out at the following parliamentary election. Now, that IS true.

@Brian Woods Snr

I have always stated that the one and only reason for the asset bubble disaster was the gobshite bankers.

At the end of the day their one and only job was to not go bust – but instead they did this spectacularly.

Politicians, civil servants and their lapdog regulators didn’t come up with the idiotic tax breaks and light touch regulation ideas in a vacuum. They obviously got lobbied by the finance industry and happily went along for the ride.

It was in 2008, as the storm gathered on the horizon, that the politicians and civil servants needed to step back from their incestuous relationship and do some game theory strategic planning. Some of them obviously had done so, as there was plans drawn up to let Anglo, and I would assume INBS, go.

Instead we got the blanket bank guarantee.

Allowing a bank insider to become CEO, giving a civil servant a European job to get him out of the country and setting up an opaque, off balance sheet bad bank showed the banking, political and civil servant class working hand-in-glove to bury the problem.

Everything else is a Kabuki play.

5 years later, the politicians and bankers have obviously conspired to “extend-and-pretend” the mortgage crisis. Every time a post appeared here about “strategic default” I always stated that the strategic bit was on the part of the banks – it’s their job to bring in the money and if they aren’t, then it just shows they continue to be crap at their job.

At this stage though, the banks not doing their job has been sniffed out by the less wholesome of the BTL brigade and they are obviously deciding “in for a penny, in for a pound”. At some stage you have to recognize that the system is intentionally rigged and the only thing left is to try and watch for who is looking to game the system.

Now at the end of the day, on a broader scale, this is a problem created by, and perpetuated by, both the politicians and the bankers to keep our European overlords happy. Allowing the banks to not repossess and thus restrict supply, letting Comical Mickey offer (and extend) tax breaks for commercial property investment, seeing the CSO publish figures that only contain 50% of the transactions, watching the propaganda machine pump stories to make it appear that prices are rising despite record low levels of mortgage drawdowns – all these things are beleaguered short-term efforts to massage the banks books to get them through the ECB stress tests. The Europeans seem to be happy to sign up for this short-termism as it suits their political needs as well.

So now, instead of having an outside agency seeking to sort out our screwed up economy, we have a new rogue to add to our gallery.

I’m happy to share the blame around – but also happy to recognize that there are no innocents left in this whole mess.

@ WGU: Thanks for that. Its a mess! That ‘off-balance’ sheet stuff is an interesting thing. Now, if you or I tried that, I fancy we might be accused of ‘fraud by deception’. 😎

Once there were the Three Wise Monkeys. Seems we have a fourth, the ECB and a fifth, the Commission. Willful Blindness.

No innocents? What about those dozy critters who are currently buying in the South Dublin residential property craze – 2014 style? Mindboggling!

Our 2011 parliamentary election should have taught Fianna Fail a stout lesson. It did not. The Coalition is simply making the situation worse and worse by the day. Hopefully both coalition parties will be well and truly defeated next time out and a wider coalition is needed. This is likely to be quite unstable, so we might expect to endure a succession of ‘inconclusive’ elections until some manner of political and fiscal sanity starts to emerge – I hope!

Thanks again. See you around.

@ Brian Woods Snr

According to the Central Bank, as of June 2012 57% of those in arrears had positive equity. Yes, you read that right. Of the 57% subset, well over 40% of them actually have a LTV of less than 50%. Yes, you read that right too.

When speaking about those unfortunates in arrears, we should not default (snigger) to the cliché of the poor fool who swallowed the lie to put a roof over his head, and through no fault of his own now finds himself in much reduced circumstances (probably having lost his job). Similarly, they don’t appear to be direct victims of the boom in the cost of PDHs. If they were, why are the LTVs so low? The true state of affairs is that those in arrears are a very mixed bag. But if YOU MUST pick a stereotype to represent them it would be more accurate to settle on someone living beyond their means, who lives in a property with positive equity, from which they could trade down but seemingly don’t feel the need to. They are the majority. They are not trapped by any means, they are ensconced. They are no doubt a mix of the social classes, with some of them very wealthy indeed.

Now, where is the harm? First we have the dire supply situation in Dublin. Scarcely 2,000 houses for sale, could really do with some natural churn couldn’t we? But why bother, sure we have reasonably decided as a society that a bank must accommodate in every possible way a home owner who can’t pay for their house, and that applies be they in positive equity, negative equity, be they very poor or very rich. All in all, there is certainly no urgency needed on behalf of a borrower who can’t meet their obligations (remember, 57% of them have positive equity, much higher now in Dublin what with a good 18 months of price increases behind them). Hold on to that house folks, don’t go handing it over to someone who can pay for it, whatever you do. Let’s not be rash. Perhaps if we engage in enough ethical flip-flopping we can come to some sort of conclusion that supports keeping people in houses worth more than their mortgage but where they can’t pay for them. There is no differentiation here in Ireland, the unemployed boom time heartbreak case gets the same treatment as the greedy credit addict who can’t run his own finances.

Second, we are back to our old friend moral hazard. Moral hazard never got a fair crack of the whip here, it started certain folk frothing at the mouth. But I’m here to tell you it is a very real issue, I know because I’ve changed my own behaviour in reaction to how this arrears crisis is playing out. In answer to your own question of whether I was naive or cynical, I am certainly not the former and I don’t believe I am the latter either. I am a realist.

The incentives are very clear for borrowing as heavily as possible. There is no disincentive for over-borrowing in Ireland. You’d have to go off the chart completely for it to come back and bite you. I was last year told I could get a mortgage of 300k, but I declined. I only wanted to borrow 275k max, I consider myself a prudent man (I’ve never had a loan since college)

I probably don’t need to tell you that my house hunting experience in Dublin since last year has been dispiriting in the extreme. Simply put, I can’t really afford what I consider to be a decent house in a good area for my family (and I’m not snobby I can assure you, I am not even looking on the South Side!) I am being outbid, either by very desperate people or investors, or who knows who. All I know is there are not enough properties for sale, but yet there are 32,000 PDH properties nationally over 2 YEARS in arrears.

So, it is fairly clear to me what I should be doing. If even BTLs with 2 years arrears aren’t being repossessed, it’s pretty clear what way the wind is blowing. So I’m going to join the herd, leverage up and hope for the best. But I don’t really need to hope very much, because even if I suffered what I’d previously have considered a catastrophic pay cut, I’m pretty sure the bank is bound to accommodate me in making my problems go away. Split mortgage, debt write off, reduced interest rate blah blah blah. I don’t care what they do, alls I know is that there isn’t anything to fear by overextending and falling down in Ireland. I can now borrow 310k, perhaps a little more. I’ll take every cent.

I never had this attitude before, I was probably quite innocent when it came to financial matters (and I still SAVE, how quaint is that?) But there comes a time where you have to look at your options and all you can say is there is a massive incentive to buy property in Ireland, with very limited risks which are utterly outweighed by the benefits. I think I’d be a fool not to. This is not a normal country and normal rules do not apply. Buying a house here comes with a whole range of attractive Options that you can avail of as and when you need them.

PUS: Thanks for that. Opinion is free, advice costs.

Keep out of the Dublin property market – unless you own a bank and can ‘rob’ it to pay the interest on the loan. Or you can repossess it for yourself if you fall into arrears. The ‘market’ is rigged. I thought that things would sort themselves out by 2015. Now its looking like 2017. Who knows.

Saving is NOT quaint. It is very sensible. Keep it up. Buy Gold coins.

Rent. You can always move if you find the area disagreeable. Though with a family, you would have to ask for a 5 – 7 year lease. Good luck!

@Uncle any link to the CB data specifically the methodology underpinning your/the LTV ratio tks.

@ Brian Woods Snr

Thanks, I’ll continue to save. I have a young son and we would like another child, but here’s another gem of the Irish property game, the more children you have the less you can borrow. Significantly less. That extra child might cost you €25,000 or €30,000 in potential credit.

You might call it prudent in one sense, but really on average most couples are going to have 2/3 kids, but in today’s Irish housing market those whose children have arrived are at a huge disadvantage to those whose are only on the way. They will not wind up living in the same areas, we can say.

I have a long renting career behind me, some very bad experiences and latterly some good. But I do live in fear of the landlord selling, leaving aside rising rents. Your idea of longer leases is sound though alien to most Irish tenants and more importantly landlords, many of the latter would not like to be so boxed in when it comes to “their” properties.

@John Gallaher: From my current position I am blocked from opening this link, but it should take you to the LTVs I mentioned earlier:

If that is not correct I’ll try and dig it out this evening.

PUS: Thanks, again. The McCarthy paper is OK, I was at the presentation. Was attempting to make some sense of the arrears mess. Seem to think that Neg Equity might be a causal factor of decision to withhold repayments. When in fact, its loss of incomes (mostly).

If I had the means to do so, I would embed an explanatory graphic (pics being worth 1000 words!) to illustrate the extent of the global financial problem.

For 150 – 200 years, or so, we had a Production/Consumption economy; [P/C]. Not altogether a bed-of-roses. However, beginning in 1970s the P bit (in western economies) was slowly (over 3 decades) eroded away: P => small p.

A Production economy usually has many ‘well-paying’ waged-labour employment opportunities. Those real, actual current incomes permit the Consumption bit to function. Crucially, the emission of credit (fiat money) is tightly controlled, and lenders deploy tried-and-tested risk-analysis protocols.

So, we had P/C, but this morphed into small p/Very Large C.

With the steady decline in the purchasing value of waged-labour (real, actual current) incomes, the only way to maintain, and increase C, is to emit credit ( = probable future incomes). But a central tenet of Globalization is to cause a REDUCTION in actual future incomes. Its called ‘enhancing competitiveness’. Actually, its pure un-adulterated, Grade AAA+, ideological propaganda.

And some dozy economic folk are now wondering why we have an intractable debt problem? Perhaps they are so busy dy/dxing and modelling virtual reality, that they have forgotten that 2 + 2 = 4, and not 5! And, God help us – they appear to have zip appreciation of the nasty, real economic outcomes of exponential rates of population growth, use of fossil energy resources and of course, Compound Interest. Maybe ‘dozy’ is a tad polite.

@uncle traveling today so had bit time to reread Yvonne’s medal winning paper,I was having all sorts problems on original tread posting.I may have started out on the wrong foot by rudely pointing out the authors expertise and background is in studying migration a bit churlish i know…oh i also tried get a few digs in at that “daft” thingy as a non academic and safely ensconced thousands of miles away i just don’t give a f**k.
Ok back to your point which is a good one.
Oh these are the authors own views and not those of the CB.
Pages 4/5 provide a overview off the “math” such that it is involved in calculating the LTV ratios.
1-excluding subprime.
2-including BTL.
3-upending the capital stack.
4-utilizing the banks who made the loans “valuations”

Just on 4 heres my issues,valuation is an art form not a science,in the resi space it’s based on past transactions.For many years reliable house price data eh such as the actual purchase price was simply not available in Irl.
At the point the valurer is retained the deal has momentum,it behoves the valurer not to “miss” the number,derailing the deal.Purchaser and bank valuations are worthless,it’s estimated in the same paper that 50% of mortgage holders are in negative equity,pg 1.One the bigger surprises is that none the major firms have been sued by the banks over their “valuations”.

Over here,the states,BPO’s or broker price opinions would be utilized not extrapolating from date of loan the “value” on the lenders file,or the lenders would have done updated valuations once the borrower started falling behind in payments.I think/believe the original valuations are fatally flawed and extrapolating using the indexes further compounds the original errors.

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