Data from ptsb on arrears and negative equity

Brendan Burgess

Brendan Burgess

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Permanent tsb released its results today.

||
Total Mortgages: |200,000
Total In arrears:|7,000|3.5%
In serious arrears:|3,000|1.5%
In negative equity:||22%
I am not sure how this typical these figures are as their lending policies were a bit different from the others. Were they the first to introduce 100% mortgages?


Incidentally, he said that they did not plan to review interests rate again until the middle of the year.
 
BOSI were the first to introduce 100% mortgage but PTSB had one of laxer lending policies back in the crazy days.
 
Hi NorfBank

Were BoSI not the first to have interest only mortgages?

I thought that they initially limited the loans to 80% which is why they didn't really apply to first time buyers only switchers.

Brendan
 
Brendan,

PTSB figures have a huge gap in them in that there are no figures for non-performing loans.

No information on interest only mortgages, MIS cases, arrears capitalisation, moratoriums.

If you do a big clean up and capitalise arrears on 30 December they will not appear on the books as arrears on 31 December.

If 1 in 5 of the working population is unemployed then it is more likely that the real figure of non-performing or criticised loans is far greater.

It strikes me that some of the institutions are not dealing with the issues. They seem to be tending to the garden while the house is subsiding.

Col
 
Brendan said:
Were BoSI not the first to have interest only mortgages?

I thought that they initially limited the loans to 80% which is why they didn't really apply to first time buyers only switchers.

Brendan
Click to expand...

If I recall correctly, BOSI were the first to have interest only mortgages for the whole term of the mortgage, I think there was already a short term interest only option available elsewhere.

First Active were the first high street lender to offer 100% mortgages.

The only groundbreaking move PTSB made was fees free banking. In the mortgage market they were more reactionary than proactive.

Open to correction though.
 
How have PTSB calculated the number of mortgages that are in negative equity? Have they carried out a re-evaluation of all the properties? Or is it some sort of a guesstimate based on the fall in average asking prices?
 
dereko1969 said:
How have PTSB calculated the number of mortgages that are in negative equity? Have they carried out a re-evaluation of all the properties? Or is it some sort of a guesstimate based on the fall in average asking prices?
Click to expand...
I would think it would have to be a guestimate. However they should know:
- date of purchase & purchase price
- original & outstanding mortgage balance
- location & category of property (house, appartment).

I would think that info is sufficient for a reasonable guestimate.
Ultimately you don't really know the value of a property until you try and sell it!
 
tiger said:
I would think that info is sufficient for a reasonable guestimate.
Ultimately you don't really know the value of a property until you try and sell it!
Click to expand...

Well that's my point, and perhaps it has been put into context in the original article/press release but it seems a bit 'bald' in its current format to state seemingly categorically that 22% of properties are in negative equity without explaining how that figure was arrived at.
 
New figures out today from the [broken link removed]

[broken link removed]

Private residential mortgages: |793,000||€118 billion
Average mortgage: |€150,000||
Number in arrears over 90 - 180 days:| 9,418 |1%|€1.7billion
Number over 180 days: |19,185 |2.5%|€3.6 billion

Legal action
Court proceedings outstanding : |3,200
Repossessions: |27
Voluntary surrender or abandonment: |74
 
Critically we're only at the beginning of unpleasant facts and figures - over the next 18 months all of the arrears numbers will increase massively as the interest rates begin to rise at pace.
 
Private residential mortgages: |793,000||€118 billion
Average mortgage: |€150,000||
Number in arrears over 90 - 180 days:| 9,418 |1%|€1.7billion
Number over 180 days: |19,185 |2.5%|€3.6 billion

In some ways the number in arrears is meaning less if you know the breakdown of how long they are in arrears and if the arrears are increasing.

For example a mortgage could have gone 6+ months into arrears 15 years ago, but since then been paid on time. As the mortgage holder never paid back the arrears (which is hard to do) or even forgotten about them, they still appear in the statistics. Meanwhile the bank happily pockets the extra interest.
 
Towger said:
In some ways the number in arrears is meaning less if you know the breakdown of how long they are in arrears and if the arrears are increasing.

For example a mortgage could have gone 6+ months into arrears 15 years ago, but since then been paid on time. As the mortgage holder never paid back the arrears (which is hard to do) or even forgotten about them, they still appear in the statistics. Meanwhile the bank happily pockets the extra interest.
Click to expand...

Thats why you look at the trends year on year and the number is certainly up dramatically.

Having said that, the figures are not that bad. The banks would be delighted if this was roughly as bad as it got. The real problem will come when interest rates rise and if unemployment is still high.
 
The figures will increase as unemployed mortgage holders clear out their savings/redundancy lump sums, max out their credit cards & start to default on repayments.
 
While the situation is likely to worsen for the reasons outlined above by Papercut, it's a very useful point to make in the wider debate that being in negative equity in and of itself is not a crisis - people do it all the time when they buy a car.
It becomes a worry for households when they want to move or lose their job - the most obvious solution being to become a landlord and rent it out, and live somewhere more suited to their needs/finances.
It becomes a worry for society when there are so many people in that situation and, they all want to move from, say, the Midlands to, say, Louth/Wexford due to a jobs boom in those counties. For the moment, at least, that's not a likely scenario.

The more information about negative equity generally, though, the better - data from the UK show it's an important contributory factor in both arrears and reposessions.
 
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