Irish Mortgage Arrears Reach New Peaks in 1Q14 | Pound Ridge Homes
In its 1Q14 'Mortgage Market Index - Ireland', Fitch Ratings
says that Irish mortgage loans in arrears by more than three months continue to
increase, reaching a new high of 18.4% of the current balance in 1Q14, up from
16.7% a year earlier. This has primarily been driven by portfolios with
concentrations of buy-to-let loans.
"There are signs that lenders are becoming more willing to
consider taking properties into possession," says Andrew Currie, Managing
Director at Fitch's Structured Finance team. "As the legal process becomes more
certain, lenders have begun to selectively enforce their security over
properties. However, it is clearly still the last resort as the number of cases
remains extremely low, especially relative to the amount of distress in the
market."
Ireland has experienced significant home price increases over
the past year, which has been driven primarily by demand for properties in
Dublin. Home prices have risen 8.1% over the past year and the peak-to-current
correction now stands at 46.7%.
"We expect lenders to negotiate partial loan write-downs for
selected borrowers, with the intention of making them sustainably affordable,"
says Mr Currie. "Lenders will retain the right to recover the full loan amount
in the event that property values rebound sufficiently in the long
term."
Fitch's 'Mortgage Market Index - Ireland' is part of the
agency's quarterly series of index reports. It includes information on the
performance of residential mortgages, predominantly from RMBS transactions, but
also those held on bank balance sheets. The report sets the housing market
against the macroeconomic background and provides commentary on the emerging
trends. The report is available at www.fitchratings.com or by clicking the link
below.
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