The Central Bank of Ireland’s Household Credit Market Report, which has just been released, indicates that the downward trend for mortgage arrears continues.

The report which is compiled by the Financial Stability Division collates information from a wide range of internal and external sources to give an up-to-date picture of developments in the household credit market in Ireland notes that arrears have fallen from €23.7bn in fourth quarter of 2014 to €22.4bn in the first quarter of 2015, representing 17 per cent of total mortgage balances.

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According to the report, “As of of the first quarter of 2015, a total of just under €22.4bn worth of loans were in arrears, down from €23.7bn in the forth quarter of 2014.

“In the first quarter of 2015, just over 17 per cent of the value of all residential mortgage loans outstanding. The overall value of mortgage arrears continues on a downward trend, having peaked at over €27.6bn in the third quarter of 2013 or approximately 21 per cent of all loans.”

Overview

• Total loans to Irish residents for house purchase amounted to approximately €117bn in Q3 2014.

• The average interest rate on outstanding mortgages in Ireland is 2.77 per cent.

• There was an increase in the volume of new lending between Q3 2013 and Q3 2014 from €750mn to €1,126mn. The number of new loans increased from 4,482 in Q3 2013 to 6,308 in Q3 2014. A majority of new loans in 2014 went to First Time Buyers.

• There has been a decline in the volume of Private Dwelling House (PDH) mortgage arrears to  €16.5bn in Q3 2014. This accounts for 15.7 per cent of the outstanding stock. As of Q3 2014, the total balance of Buy-to-Let (BTL) mortgages in arrears was approximately €8.9bn, representing 30.8 per cent of the total outstanding credit stock.

• In recent quarters, there has been an increase in the number of PDH mortgage modifications provided to borrowers by financial institutions. In Q3 2014, there were just under 110,000 PDH modifications, an increase from approximately 80,000 in Q3 2012. Approximately four-in-five or 82 per cent of borrowers who received PDH mortgage modifications are meeting the terms of the arrangement.

• Outstanding consumer loans stood at  €11.6bn in October 2014. Default rates on non-mortgage loans were between 12 per cent for revolving facilities and 15 and 24 per cent for secured and unsecured term loans as of June 2014.

References / Sources: Central Bank of Ireland, Credit, Money, and Banking Statistics, ECB and Eurostat.