Irish mortgage arrears rate falls to lowest level in almost 12 years

The rate of Irish owner-occupier mortgages in arrears for more than three months fell to 4.5 per cent by the end of December, the lowest level in almost a dozen years, as Government supports for households and businesses underpinned the economy during the worst of the Covid-19 crisis.

The number of home loans in default amounted to 32,558 at the end of December, bringing the ratio down from 4.7 per cent at the end of September, according to Central Bank data published on Wednesday.

“This continues the incremental downward trend observed over the last number of years and is the lowest number of accounts in arrears over 90 days since March 2010,” the bank said.

The ratio had peaked at 12.9 per cent in 2013, in the wake of the financial crash, when the State was coming to the end of an international bailout programme.

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Irish banks, in line with many lenders internationally, started to release money last year that they had previously set aside to cover an expected surge in Covid-induced bad loans that has yet to materialise to the extent that was initially feared.

Bank of Ireland executives said last month, for example, that they expected their overall non-performing loans ratio, covering all types of loans, to fall this year from 5.5 per cent in December.

Outgoing chief financial officer Myles O’Grady said that, while the bank expected non-performing loan “inflows” during 2022, the fast pace at which the bank’s restructuring team was working on finding solutions for troubled borrowers should result in an overall drop in non-performing loans.

Outstanding balance

The outstanding balance on private dwelling home mortgage accounts in arrears of more than 90 days was €6.6 billion at end-December, equivalent to 7 per cent of the total outstanding balance. Accounts at least a year behind in payments accounted for 55 per cent of all cases in arrears.

Almost half of the 25,898 accounts in default for at least a year are categorised as not co-operating with their lender. Some 6,257 account have legal proceedings in process, with the vast majority in the legal system for more than two years.

A total stock of 66,590 accounts were categorised as restructured at end-December 2021, representing 9 per cent of all owner-occupier loans. The total number of restructure arrangements fell 3 per cent over the quarter, continuing a long-term trend of decline.

Some 12 per cent of buy-to-let loans were in arrears for more than 90 days at the end of December, representing a 6 per cent decrease over the quarter. More than 40 per cent of all buy-to-let loans in arrears were more than five years behind in repayments.