Continuing slowdown in growth of arrears is welcome, says IBF

Below is a statement from the Irish Bankers Federation regarding today’s arrears figures.

Continuing slowdown in growth of arrears is welcome, says IBF

The Irish Banking Federation (IBF) notes that the latest Central Bank statistics on mortgage arrears confirm a continuing slowdown in the rate of growth in arrears.  While the total number of private residential mortgages in arrears has increased, as had been expected, this further slowing of growth in arrears is particularly welcome.

As the following statistics and graphs show, the slowdown in the growth in arrears is evident across different stages of arrears:

·a decline in the number of early stage arrears of less than 90 days – a quarter-on-quarter decline of 1.3%

· a further slowing in the pace of increase in arrears over 90 days – the slowest quarter-on-quarter rate of increase since Sept’09

· a further slowing in the pace of increase in arrears over 180 days

The decline in early-stage arrears (less than 90 days) is particularly significant as it confirms that fewer customers are falling into arrears.

At the same time, the overall level of mortgage arrears has increased to 11.9% of all private residential mortgage accounts.  However, this should come as no surprise given the difficult economic conditions faced by a sizeable number of customers.  Nor is it unexpected that the number of accounts in long-term arrears over 720 days has increased, as increases in new mortgage arrears in previous periods will be followed some time later by a deterioration in the level of longer-term arrears.

The fact that a total of some 102,000 mortgage accounts – principal dwelling house (PDH) and buy-to-let (BTL) – have been restructured is testament to banks’ commitment to working with distressed customers to find workable solutions.  They remain fully focused on addressing customer arrears, doing so diligently on a case-by-case basis where the borrower is fully engaged and where full and accurate information is provided by means of the Standard Financial Statement (SFS).  This includes the provision as appropriate of loan modification and resolution options to borrowers for longer-term and more sustainable solutions.

It is also notable that the small decline to some 80,000 in the total number of restructured PDH mortgage accounts is accounted for by a fall in the number of temporary restructure arrangements such as payment moratoria and interest only arrangements; while at the same time the number of permanent restructure arrangements such as term extension, arrears capitalisation and split mortgages has increased.

Commenting on the figures, IBF’s Director of Public Affairs, Felix O’Regan, stated:

“This continuing slowdown in the growth of various categories of arrears is very welcome and it mirrors what member banks have been reporting to IBF.  A considerable challenge lies ahead of course in dealing with the overall stock of arrears and banks are fully committed to that challenge.  However, they need the full range of tools to be fully effective which is why urgent action on the Justice Dunne judgment, an immediate review of the Code of Conduct on Mortgage Arrears, modernisation of the legal process in line with other jurisdictions and clear policy support for the prioritisation of secured over unsecured debt are so important.  Notably, today’s statistics reflect a discernible evolution from temporary to more permanent arrangements for customers which is clear recognition by lenders of the appropriateness of longer-term resolutions for some borrowers.”

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