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Irish mortgage arrears tracked by Fitch are higher than ever

A new report from Fitch also says that price rises in Dublin are fleeting.

Independent TDs and activists protest against the sale of IBC mortgages earlier this year.
Independent TDs and activists protest against the sale of IBC mortgages earlier this year.
Image: Laura Hutton/Photocall Ireland

THE PROPORTION OF Irish mortgages tracked by ratings agency Fitch in arrears of three months or more has reached a new peak.

A report on the mortgage market by Fitch shows that among the mortgages that the agency tracks, the proportion in long term difficulty increased to 18.4 per cent in the first quarter of 2014.

This is only a minor increase of 0.1 per cent on the last quarter of 2013, but a climb of 1.7 per cent when compared to the full year statistics for last year.

Fitch tracks several portfolios which contain more buy-to-let loans than the market average, suggesting that the arrears issue is more apparent in the this section of the market.

Analyst Sanja Paic told TheJournal.ie that there may be more arrears in the pipeline, especially among buy-to-let properties.

Fitch said that the main driver for the large proportion of arrears remains the huge drop in income levels compared to the heavy burden imposed by the size of mortgages taken on during the economic boom.

Dublin price slowdown on the horizon

The recent growth in house prices in Dublin is unlikely to be a long term feature of the housing market, the agency said.

“The recent growth in house prices in Dublin, although unlikely to persist in the long run, is putting pressure on affordability.”

This trend is expected to be short term and is unlikely to reach levels seen at the peak of the market.

Analysts warned, however, that there needed to be more supply on the market in order to keep a lid on house prices.

Solutions expected to increase

The report’s authors say that they expect to see more restructuring, mortgage write downs and enforcements as a result of revisions to the code of conduct on mortgage arrears last summer.

The revisions allow banks more leeway in dealing with non co-operative borrowers.

Fitch analyst Ketan Thaker said that he expects repossessions to rise, but over a long period with no immediate uptick in prospect.

Pressure from the Central Bank on banks to find sustainable soluitions for mortgage holders makes more debt write downs appear “inevitable”, the report finds.

Fitch is forecasting GDP growth of 1.6 per cent for 2014, improving to 2.2 per cent in 2015, with unemployment set to fall to 11.8 per cent this year and 11.4 per cent by the end of next year.

AIB explains why its home repossessions tripled last year>

Just four mortgage deals have been completed by the Insolvency Service>

About the author:

Jack Horgan-Jones

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