Worrying trends continue in latest mortgage arrears data – repossessions, restructures, longer term arrears

16 March 2017

The latest data on mortgage arrears released by the Central Bank confirms that worrying trends continue where family homes are in mortgage arrears. Legal rights group FLAC highlighted that repossession data shows over 5,000 homes repossessed over the last four years.

“With the Quarter 4 figures for 2016, we now have four full years of data on repossession in Ireland. Since 2013, a total of 28,917 new repossession cases have been brought, and 5,306 family homes have been repossessed through court orders or by voluntary surrender during this time,” noted FLAC Senior Policy Analyst Paul Joyce.

“We also know that a substantial number of cases have been struck out or withdrawn but it is worrying that there is no figure provided for the number of repossession cases currently before Circuit Courts. What is clear is that many such cases have been in the system for some time and the households involved are at serious risk of repossession. FLAC believes that this information is necessary to understand the scale of the issue facing such households and should be made available,” he said.

While overall arrears continue to fall, FLAC (Free Legal Advice Centres) is concerned that there is limited progress in tackling longer term arrears cases. Although the number of accounts in arrears for over two years has decreased from 34,551 to 33,447, Mr Joyce noted that the average arrears amount on these accounts increased from €63,611 to €65,895 over the last quarter of 2016.

Significantly, vulture funds are increasing their share of impaired mortgage accounts, particularly those which are in deep, longer-term arrears. Vulture funds now own over 15% of the accounts in arrears over two years, up from 11% in the previous quarter.

 “The rate of failure in restructures is another worrying trend,” said Mr Joyce. “Almost 1,400 split mortgage arrangements are failing to meet the terms of the arrangement, and the failure rate for capitalisation of arrears is 22.5%, almost a quarter. This indicates that unrealistic restructuring arrangements are being made, with most lenders continuing to avoid the write-down of the mortgage to a sustainable level.

“FLAC believes lenders must consider all available restructuring options, including mortgage write-down where appropriate, if the aim is to keep as many people in their homes as possible,” he concluded.

/ENDS

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Editors’ notes:

1. FLAC (Free Legal Advice Centres) is a human rights organisation which exists to promote equal access to justice for all. As an NGO, FLAC relies on a combination of statutory funding, contributions from the legal professions and donations from individuals and grant-making foundations to support its work.
2. FLAC offers basic legal information through its telephone information line (1890 350 250). Free legal advice is available from volunteer lawyers through a countrywide network of 80 evening advice centres – more at www.flac.ie/help/.  FLAC also campaigns on a range of issues including consumer credit, personal debt, fairness in social welfare law, public interest law and civil legal aid. FLAC has issued numerous analyses and policy statements calling for a fairer mortgage arrears resolution process.
3. The data for Q4 2016 is at https://www.centralbank.ie/polstats/stats/mortgagearrears/Documents/2016q4_ie_mortgage_arrears_statistics.pdf
4. Some analysis of the latest figures combined with data from previous four years:

QUARTER 4 2016 – Central Bank Principal Dwelling House (PDH) mortgage arrears, restructure and repossession figures

Arrears General

• Overall number down from 79,562 to 77,493 (2.6% decrease)
• Over 90 days down from 56,350 to 54,269 (3.7% decrease)
• Over 2 years arrears category down from 34,551 to 33,447 (3.2%) and remaining at approx. the same percentage of the accounts in arrears over 90 days (61.6% from 61.3%)
• Average arrears on accounts over two years in arrears, however, increases from €63,611 to €65,895

Vulture funds arrears

• Vulture funds now hold 7,445 (9.6%) of the total number of accounts in arrears up from 5,719 (7.2%) at the end of the previous quarter
• The number in arrears over two years held by vulture funds is now up to 5,054 (15.1% of the total) from 3,765 (10.9% of the total)
• Thus 68% of the accounts in arrears owned by vulture funds (5,054 out of 7,445) are in arrears for over two years

Repossession activity in the quarter

• 1,397 new repossession cases relating to Principal Dwelling Houses were brought in the quarter
• 273 Possession Orders were granted in the quarter and 112 Possession Orders were executed
• A total of 343 family homes were voluntarily surrendered in the quarter. Together with the 112 orders executed, this means that a total of 455 were repossessed in the quarter – the highest quarterly total since this information began to be collated

Restructuring activity in the quarter

• The number of restructured accounts has marginally decreased from 121,140 to 120,944
• Of the 27,079 split mortgages, 93.9 % are said to be meeting the terms of the arrangement. This means that 1,359 are not sticking to the agreed terms, an increase of 293 over the quarter.
• Of the 38,406 arrears capitalisations, 77.5% were sticking to the terms of the arrangement, meaning that 8,641 were not, again an increase of 454 over the quarter

Repossession activity 2013-2016

• Over the last four years (2013- 2016), a total of 28,917 repossession cases have been brought against family homes
• 4,333 Possession Orders have been granted
• 1,783Possession Orders were executed
• 3,523 homes were voluntarily surrendered
• Thus, a total of 5,306 family homes have been repossessed over the past four years
• There is no total figure for the number of repossession cases currently before Circuit Courts. This is a highly significant omission, given that nearly 29,000 cases have been brought in the past four years