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Almost 95,000 mortgage holders are in arrears

Some 27 per cent of buy-to-let loans worth €8.4 billion were over 90 days past due at the end of 2012 according to the Central Bank’s latest review.

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ALMOST 95,000 MORTGAGES were in arrears for more than 90 days in December 2012, according to the latest financial review from the Irish Central Bank.

This represents 11.9 per cent of the total stock of loans for primary dwellings in arrears, compared with 11.5 per cent in September last year. Some 27 per cent of buy-to-let loans worth €8.4 billion were over 90 days past due at the end of 2012.

The review said arrears have been driven by falling property prices, a rising rate of unemployment and extensive output loss since the crisis began in 2008. It warned that effective arrears management is needed to eliminate uncertainty about households’ and banks’ balance sheets.

Other key notes in the review include:

  • Irish GDP grew 0.9 per cent in 2012, at a weaker rate than the previous year, mainly due to a slowdown in external demand;
  • Bank margins in Ireland remain very narrow and hence longer-term viability and credit supply conditions in Ireland depend on them returning to profitability and their successful transition back to market-based finding;
  • The volume of new lending by Irish banks to non-financial businesses has remained below 12 per cent since 2011 though debt owed to banks is falling;

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  • Among Irish-owned enterprises, non-exporters account for 82 per cent of employment and 67 per cent of economic activity, though export growth has been led by multi-nationals;
  • Commercial property prices continue to decline, falling at a year-on-year rate of 5.8 per cent as of March 2013;
  • Household debt is in the region of €175 billion, which equates to over 200 per cent of disposable income and over 100 per cent of GDP;
  • Households have been reducing their aggregate level of indebtedness since 2009 and as of end-2012 continued to do so;#
  • However households have been reducing their aggregate level of indebtedness since 2009 and as of end-2012 continued to do so;

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  • Reliance on central-bank borrowing has declined by more than €20 billion since September and now accounts for 15 per cent of total funding, down from 28 per cent in 2010;
  • Both arrears and sustainable funding will remain challenges in the coming years and will need to be overcome to ensure banks’ resilience;
  • Growth of 1.2 per cent is forecast for this year.

Read: Mortgage holders in arrears are older and more likely to have children – report>
Column: How to deal with your bank if you’re in mortgage arrears or pre arrears>

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