Moody’s figures show rising mortgage distress

The proportion of Irish mortgage holders having difficulty servicing their loans continues to rise, according to the latest analysis by Moody’s.

The performance of Irish prime residential mortgage-back securities continued to deteriorate in the three months to April, the ratings agency said.

The 90-day delinquency trend reached a new peak, rising to 18.1 per cent from 17.3 per cent over the same period while the percentage of loans in the 360-day plus category, which is used as a proxy for defaults, rose to 9.4 per cent from 8.5 per cent.

The bonds examined by the agency constitute more than 40 per cent of the entire mortgage market.

The agency said the rate of increase of the 30-day plus category of delinquincies was slowing but the overall situation is still deteriorating and the agency has maintained a negative outlook for the bonds.

“The steep decline in house prices since 2007 has placed the majority of borrowers deep into negative equity. Low house prices increased the severity of losses on defaulted mortgages,” the agency said.

Moody’s annualised total redemption rate trend was 2.7 per cent in April 2013, down from 3.3 per cent in April 2012. The low figure indicates a very low level of remortgaging.

Statistics released by the Central Bank earlier this month showed that mortgage lending fell by 1.9 per cent in the year to March 2013. This was the 13th consecutive quarterly decline in loans for house purchase and the largest decline seen since June 2010.

The outstanding amount of mortgage loans stood at € 84.3 billion as of end-March 2013.

About 150,000 mortgages are in arrears of more than 90 days, according to recent figures from the Insolvency Service of Ireland.

The Government has estimated about 18,000 people will apply for personal insolvency schemes in the first year of their operation, though industry estimates put the likely figure at 25,000-40,000.