"Central Bank figures 'overstating' number in mortgage crisis "

Brendan Burgess

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An interesting article (by Laura Noonan?) in today's Irish Independent

An investigation by the Irish Independent has revealed the Central Bank's figures include several types of borrowers who are no longer in trouble.


A large number of senior bankers right across the industry who spoke to the Irish Independent now insist the situation is improving.


..

But these figures include: - Those who missed payments long ago and have since resumed paying normally.


- Those who fell behind and agreed ‘restructuring' deals with their banks to lessen monthly payments.


- Those who have successfully done more informal deals to work through their mortgage problems.

Certainly the issue of legacy arrears overstates the problem, but I have no idea of how much these are. I would have thought that they were a very small percentage of the overall.

If someone falls into arrears and then agrees a restructuring - they could be making the agreed restructured payments, but still be in the arrears stats due to the legacy arrears. This would explain why so many of those who have restructured are in arrears. The restructuring hasn't failed, it's just that they waited until they went into arrears before restructuring.

However, a much better measure would be the number of people who have paid less than the interest on their mortgage over the past 12 months. This would be a real measure of difficulty.
 

mcaul

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I was thinking along the same lines. Retail sales are picking up and you don't hear as many people complaining about finances. Also the tracker mortgage rates of 2% are helping a huge number of people pay mortgages that if on a regular rate of 4.5% - 5% would be crippling.

The bulk of unemployment is in the younger male category and those who really really want a job are getting jobs - probably not what they wanted, but the attitude of many is a job is a job and better to be in one than not.

Maybe, just maybe, the light at the end of the tunnel can be seen.
 

DerKaiser

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However, a much better measure would be the number of people who have paid less than the interest on their mortgage over the past 12 months. This would be a real measure of difficulty.

That would be a good measure.

Though there's quite a difference between fewer new cases falling into arrears as opposed to the total number of cases in arrears. Despite the fall in new cases, it's conceivable cases going into arrears still exceed those coming out of arrears.
 

Brendan Burgess

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Stephen Kinsella from University of Limerick responded to the piece

Devil is in the detail where mortgage crisis is concerned


The facts are pretty clear. More than 10pc of residential mortgages in the State are in some form of distress, 77,630 at last count, to be exact. That number of people could fill Croke Park. Some of these mortgages have been restructured -- that's French for going 'interest only' or paying less than the normal monthly payment -- but all are more than 90 days in arrears. Even worse, 59,437 mortgages are in arrears for more than 180 days. These mortgages are truly underwater.

...
a combination of factors drive mortgage arrears: the interest rate on the mortgage, unemployment, house prices, with the addition of rental rates for the buy-to-let sector. What has happened to unemployment rates? They have been roughly constant at just over 14pc since 2010. What about interest rates? Variable rate customers have endured large increases in their interest payments, and indeed it is this section of mortgage holders that have found themselves proportionally more in arrears than others, such as those on trackers or fixed repayments. What about rental rates? They have sunk. And we all know what has happened to house prices.
 
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