720 days of mortgage arrears totalling €8bn

The percentage of mortgages in long-term arrears is on the increase with more than €8bn of total arrears falling into this category, new data shows.

Despite the overall decline in the volume of primary-dwelling home arrears, there has been an increasing percentage of loans more than 720 days past their repayment date, according to the Central Bank’s household credit market report published yesterday.

In addition to the €8bn worth of lending in long-term arrears, a further €6.8bn was 180 to 720 days overdue. The value of mortgages in arrears has fallen from peak levels of just over €18.8bn in the third quarter of 2013 to €16.6bn representing more than 15% of the outstanding stock of loans.

The prevalence of mortgages in arrears varies significantly by county with Cork, Tipperary and Mayo the least affected.

Conversely, default rates were high in counties in the border and midland regions.

Furthermore, as of the third quarter of last year 31% of outstanding buy-to-let properties were in arrears.

The report also shows almost 30% of primary-dwelling home mortgages are in negative equity with another 7% in default.

Loans originating in the peak of the credit boom between 2004 and 2008 account for a large proportion of mortgages in negative equity. Rising house prices over the past 18 months have failed to lift many house- owners out of negative equity with more than 50% of mortgages taken out in 2007 still mired in that position.

There was an increase in the volume of new lending in the third quarter of last year as prospective homeowners rushed to avoid the Central Bank’s new restrictions on mortgage lending.

More than €1.2bn worth of mortgages were issued in that period, compared to €750m in the same period of 2013. The number of new loans rose from just shy of 4,500 to more than 6,300 with the majority of loans issued to first time buyers.

There has been an increase in the number of primary-dwelling home mortgage modifications with some 110,000 loans having been revised at the end of the third quarter last year.

About four in five borrowers who have had their mortgages restructured in some way are managing to meet the revised terms of the loan, the Central Bank report shows. The average interest rate on outstanding mortgages is close to the European average at 2.77%.

The country’s large cohort of tracker mortgage customers have benefited from a series of ECB cuts.

The report also finds that since 2009 the level of consumer credit has steadily declined in the Irish market.

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