More homeowners slipped into mortgage arrears in first quarter

The number of homeowners who have fallen into arrears on their mortgage increased by 3 per cent in the first quarter of this year, new data from the Central Bank shows.

There were 716,560 private residential mortgage accounts for principal dwellings held in the Republic at the end of March, with a value of just under €100 billion, the regulator said.

Of the total stock, 48,760 accounts were in arrears, which was an increase of 1,430 accounts – or 3 per cent – over the quarter.

The Central Bank pointed out, however, that about 1,300 of these were down to a “reclassification effect” arising from the sale of KBC loans to Bank of Ireland during the quarter.

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The European Central Bank (ECB) raised interest rates by further quarter of a percentage point on Thursday, placing additional financial strain on mortgage holders, particularly the State’s 250,000 tracker customers.

The latest rate increase, the eighth since last July, also came with a warning that the bank’s unprecedented ramping up of interest rates is not over yet as the ECB continues to try to bring inflation under control.

Minister for Finance, Michael McGrath, told a conference this week that mortgage holders who are making a genuine effort to repay their loans must not be allowed to fall into arrears due to the hikes.

The Central Bank data also shows the number of properties in possession by lenders was 458, down from 486 in possession from the end of December.

A total of 39 homes were taken into possession by lenders in the quarter. A majority of properties, at 22, were repossessed on foot of a court order, while 17 were voluntarily surrendered or abandoned.

During the quarter, 37 properties were disposed of by lenders. As a result, lenders were in possession of 287 private home dwellings properties at the end of March.

Despite the overall increase, accounts in arrears for more than one year continued to decline. Some 29,294 mortgages, or 4.1 per cent, were in arrears of more than 90 days.

The outstanding balance on private dwelling house mortgage accounts in arrears of more than 90 days was just over €5.7 billion at the end of March, equivalent to 6 per cent of the total outstanding balance on all private dwelling house mortgage accounts.

Accounts in long-term mortgage arrears, of over one year, accounted for 45 per cent at the end of the quarter. The number of accounts in long-term arrears declined by 764 accounts over the quarter.

Non-bank entities accounted for 16 per cent of the total stock of private dwelling house mortgage accounts outstanding.

Some 18 per cent of all private dwelling house accounts held by non-banks were in arrears over 90 days and 15 per cent were in arrears of over one year.

For non-banks, a greater proportion of private dwelling house accounts held are in longer-term arrears when compared to banks.

[ Homeowner’s mortgage jumps from €765 to €1,089 after ECB rate rise ]

Of the private dwelling house accounts in arrears, some 5,608 accounts, or 12 per cent, are currently part of a legal process, 40 per cent of which have been in the legal system for over five years.

There were 73,259 residential mortgage accounts for buy-to-let properties, with an outstanding balance of €11 billion. Some 10,454 buy-to-let accounts were in arrears at the end of March, which was an increase of 113 accounts over the quarter.

Of the total buy-to-let stock, 7,848 accounts, or 11 per cent, were in arrears of more than 90 days.

Buy-to-let accounts in arrears of over one year numbered 6,635 or 9 per cent of all such accounts. The outstanding balance on these accounts was €1.9 billion at the end of March, equivalent to 17 per cent of the total outstanding balance on all buy-to-let accounts.