BTL Mortgage Arrears, Restructures and Repossessions


#1

We have a thread for Residential Mortgages here
viewtopic.php?f=10&t=44532&start=90

So now we have one for BTLs.

BTL Mortgage Arrears, Restructures and Repossessions

Q3 2012 figures out today for BTLs for the first time.
centralbank.ie/polstats/stat … istics.pdf

Outstanding:
Total BTL mortgage loan accounts outstanding - at end of Q3 2012 149,952 (Q2 2012 150,187)

Arrears:
Total BTL mortgage arrears cases outstanding - at end of Q3 2012 which are:

  • In arrears 91 to 180 days 4,942 (Q2 2012 5,039)
  • In arrears over 180 days 21,828 (Q2 2012 19,840)
    of which
  • In arrears 181 to 360 days 6,976 (Q2 2012 Not provided)
  • In arrears 261 to 720 days 8,224 (Q2 2012 Not provided)
  • In arrears over 720 days 6,628 (Q2 2012 Not provided)

Total BTL arrears cases over 90 days outstanding 26,770 (Q2 2012 24,879)
% of loan accounts in arrears for more than 90 days 17.9% (Q2 2012 16.6%)

Repossesions:
BTL properties in possession - at end of Q3 2012 414 (Q2 2012 378)

  • of which BTL properties repossessed on foot of an Order to date in 2012 Not provided
    (Q1 Unknown, Q2 Unknown, Q3 28)

  • of which Residential properties repossessed on foot of an Order in 2011 Not provided

  • of which Residential properties voluntarily surrendered/abandoned to date in 2012 Not provided
    (Q1 Unknown, Q2 Unknown, Q3 46)

  • of which Residential properties voluntarily surrendered/abandoned in 2011 Not provided

Restructured Mortgages:
Total outstanding classified as restructured - at end of Q3 2012 22,553 (Q2 2012 21,671)

  • of which are not in arrears 14,275 or 63.3% (Q2 2012 11,088 or 51.2%)

So we can see:

  1. Arrears jumped from 16.6% to 17.9%
  2. Restructured mortgages, NOT in arrears, jumped from 51.2% to 63.3%

#2

“Restructured mortgages, NOT in arrears, jumped from 51.2% to 63.3%”
By restructured I’d guess they’d mean mostly given an interest free loan period.
I know of some who have an interest free loan period coming to an end very soon.
That 17.9% figure is going to balloon to over 30% very quickly.


#3

Pardon my simplistic view on this … but are we seeing only 18.8% of BTL not being either restructure or in arrears?

so under 20% of BTL mortgages are not showing some sign of being in trouble?

No wonder they are trying to keep my fucking rent inflated!


#4

I see where you’d think that but it’s 63.3% of restructured loans not in arrears, not 63.3% of all BTLs.

But to calculate the true figure

26,770 (or 17.9% of all BTLs) in arrears over 90 days +

22,553 (15.0% of all BTLs) restructured =

32.9% of all BTLs in trouble of some sort


#5

Thanks for number crunching Jack.

Is there a figure for in arrears 1-89 days?


#6

Thanks folks… my blood pressure can now drop down a smidgen :slight_smile:


#7

Yes. Didn’t put it in as 90 days+ is the standard point after which a mortgage is in ‘trouble’.

Figure is

In arrears up to 90 days Q3 2012 9,919 (or 6.6% of all BTLs) compared to Q2 2012 9,840 (or 6.6% of all BTLs )


#8

Yes, 13,123 of 22,553 restructures in Q3 2012 were for an Interest Only period.


#9

BTL Mortgage Arrears, Restructures and Repossessions Q4 2012 figures are out today
(note: analysis below includes a lot of restated Q3 figures)

centralbank.ie/polstats/stat … istics.pdf

(We also have a thread for latest Residential Mortgages figures here)
viewtopic.php?f=10&t=44532&p=687306#p687306

Outstanding:
Total BTL mortgage loan accounts outstanding - at end of Q4 2012 150,344 (Q3 2012 150,544)

Arrears:
Total BTL mortgage arrears cases outstanding - at end of Q4 2012 which are:

  • In arrears up to 90 days 9,534 (Q3 2012 9,617)
  • In arrears 91 to 180 days 4,762 (Q3 2012 4,986)
  • In arrears over 180 days 23,659 (Q3 2012 22,032)
    of which
  • In arrears 181 to 360 days 6,830 (Q3 2012 7,043)
  • In arrears 261 to 720 days 9,075 (Q2 2012 8,306)
  • In arrears over 720 days 7,754 (Q2 2012 6,683)

Total BTL arrears cases over 90 days outstanding 28,421 (Q3 2012 27,018)
% of loan accounts in arrears for more than 90 days 18.9% (Q3 2012 17.9%)

Repossessions:
BTL properties in possession - at end of Q4 2012 454 (Q3 2012 414)

  • of which BTL properties repossessed on foot of an Order to date in 2012 Not provided
    (Q1 Unknown, Q2 Unknown, Q3 28, Q4 22)

  • of which Residential properties repossessed on foot of an Order in 2011 Not provided

  • of which Residential properties voluntarily surrendered/abandoned to date in 2012 Not provided
    (Q1 Unknown, Q2 Unknown, Q3 46, Q4 66)

  • of which Residential properties voluntarily surrendered/abandoned in 2011 Not provided

Restructured Mortgages:
Total outstanding classified as restructured - at end of Q4 2012 21,800 (Q3 2012 22,182)

  • of which are not in arrears 13,469 or 61.8% (Q3 2012 14,023 or 63.2%)

So we can see:

  1. Arrears jumped from 17.9% Q3 to 18.9% Q4
  2. Restructured mortgages, NOT in arrears, fell from 63.2% Q3 to 61.8% Q4
  3. 28,421 (18.9% of all BTLs) in arrears over 90 days + 21,800 (14.5% of all BTLs) restructured =
    33.4% of all BTLs in trouble of some sort

#10

If just 10% of those are in Dublin, it is more than twice the number of properties for rent in all of Dublin City & County on Daft. There are also the 9,000+ that are 1-90 days in arrears which, if added, would get us close to requiring only 5% of the total to be in Dublin for it to double current number on the market. And I would have thought the number in Dublin is significantly higher than 10% (never mind 5%), but I can’t say for sure of course.

So what? I hear LL say. The point is that it shows that the numbers can’t be dismissed as insignificant or too small a part of the whole to matter. When you’re talking about doubling the number of properties for rent overnight if the market were allowed to operate normally, then is it surprising rents are rising? This is why current rent rises are entirely, entirely fake.

In a neutral universe, all of that red ink would have expressed itself in the market, either in the form of lower rents that reflect a sustainable yield wrt to the size of the mortgages. Or, because those properties would have transacted at their “true” value, which would have the effect of removing rental demand and/or lowering rents.

Neither of those things is happening though because the banks are using magic money to make sure it doesn’t happen, because if it did it would reduce the marginal prices and rents across their roster of 100,000 BTL mortgages that are performing.

Massively, massively rigged game.


#11

I may be missing the point here, but surely those BTL arrears mortgages could be on properties occupied by tenants. So if the bank forecloses, it actually won’t cause any increase in the number of properties available for rent. It will just change the ownership; so existing tenants will get a change of landlord.

There’s no particular reason for a change in landlord to lead to lower rents. While (I suppose) it could be argued that the heavy debt levels on BTL properties act as a block to lowering rents, on the other hand isn’t the point made that in many BTL properties the rent isn’t covering the debt in any case. In other words, the level of rent charged is whatever the market will bear, which frequently won’t service the landlord’s debt. If the landlord hasn’t enough income to cover the difference (or chooses not to cover the difference), the loan will go into arrears. But all that’s largely independent of rent levels.

Also, couldn’t repossession of BTL properties actually put pressure on rents, if any significant amount of those properties were bought by owner-occupiers and thus taken out of the rental market?

Again, apologies if I’ve missed the point. But I don’t see how rents are kept high as a result of landlords going into loan arrears.


#12

Where are the owner-occupiers moving from? If it’s from another rental property, then a rental property gets freed up by them. If it’s from their own house, then their house gets freed up to be bought by a landlord, or a new owner occupier who has moved from a rental, or… their own house.

Ad infinitum.


#13

I may have over-egged the pudding, but hopefully won’t distract form the main point; the effect of repossession of BTLs is just to change the identity of the landlord. It does not add to rental stock.


#14

But it is very likely to increase the sales stock. Even EAs say that a more fluid market with more transactions would be a good thing.


#15

So it looks like 50,214 BTL properties (33.4% of 150,344) in some sort of trouble?

If every single one of these 50,214 BTL properties were repossessed and dumped on the market right away (not likely), it still only amounts to 53% of house completions for 2006 (93,419)


#16

If the property changes ownership, at what price will it change ownership? For a property bought at the peak, you’re talking about 50%+ lower than current book value. This means a new landlord, to get the same yield as the previous landlord, and indeed to get enough rent to cover the new mortgage, only needs to get c.50% less rent. Because prices are set at the margin, once you start this process it will feed through to every subsequent sale of BTL style properties, and all rents.

The bigger picture is that there is a vast amount of illusory value on the banks’ books that is feeding through to the ground and keeping rents high. The banks are maintaining those fake values by accessing bailout funds to bridge the gap between book value and achievable rent. It is this vast amount of fake value - many billions of euros for BTL’s, and probably €35b for all mortgages - that needs to come out of the system or else you and I will be paying for it and subsidising the BTL owners. And the entire economy is paying because disposable income is disappearing into unproductive housing costs.

The level of rent charged isn’t what the market will bear though - the level of rent is what the currently rigged market will bear. The most obvious way to demonstrate that it’s a rigged market is the BTL arrears themselves. If we were truly dealing with a fair market, how come 1 in 3 BTL’s is in arrears? This in itself is proof of a broken market - there isn’t enough rent in the system to pay for the liabilities. Crudely speaking, there is a 33% shortfall…THAT is the true level the open market can bear.

The other element to this is about supply of stock. The banks are withholding stock that should be on the market - were it not for their ability to finance forbearance at preferential bailout rates - which would lead to lower prices and subsequently lower rents.

But where are those OO’s living now? Presumably in rental accommodation. So if they buy, it removes rental demand and rents fall.

I’m only an amateur with theories. I have no academic or professional knowledge about any of this stuff.


#17

Looks like Jack O’connor’s going to try to do everything in SIPTUs power to prevent repossessions (full text at irishtimes.com/newspaper/bre … ing12.html)

Siptu has reacted strongly to comments from the secretary general of the Department of Finance John Moran, who told the Public Accounts Committee yesterday that the level of repossessions in the Republic was “uncharacteristically low”.

Mr Moran told the committee that banks should soon be able to “move forward” on tackling problem home loans.

The Republic has a repossession rate of about 0.25 per cent of mortgages, compared with 3 per cent in the UK and up to 5 per cent in the US.

“It’s surprising to us that there are so few repossessions in the system at the moment, given the extent of the crisis,” Mr Moran said. “Ultimately, it is the other people in the country who are paying for these people to stay in their houses.”

In a statement this morning, Siptu general secretary Jack O’Connor described Mr Moran’s comments “reprehensible and barbaric”.

“The Government must to come up with better solutions to the mortgage crisis than reverting to the tactics of colonial lackeys in nineteenth Ireland. The parallels between the graphic images of post-famine Ireland and the prospect our own authorities evicting people from their family homes to pay off debts to those at the top of the European banking system are striking,” he said.


#18

Mr. O’Connor’s priorities, in no particular order:

  1. People in well paid, tenured jobs with no ability to lose those jobs.
  2. Owners of natural capital, the key means of production.
  3. His own cartel, and similar closed-shop cabals, insiders and special interests.

Some fucking socialist.


#19

BTL Mortgage Arrears, Restructures and Repossessions Q1 2013 figures
(note: analysis below includes restated figures for previous quarter)

centralbank.ie/polstats/stat … istics.pdf

(We also have a thread for latest Residential Mortgages figures here)
viewtopic.php?f=10&t=44532&p=687306#p687306

Outstanding:
Total BTL mortgage loan accounts outstanding - at end of Q1 2013 149,395 (Q4 2012 150,124) [Change in period: -729 or -0.5%]

Arrears:
Total BTL mortgage arrears cases outstanding - at end of Q1 2013 which are:

  • In arrears up to 90 days 10,002 (Q4 2012 9,512) [Change in period: +490 or +5.2%]
  • In arrears 91 to 180 days 4,609 (Q4 2012 4,752) [Change in period: -143 or -3.0%]
  • In arrears over 180 days 24,760 (Q4 2012 23,614) [Change in period: +1,146 or +4.9%]
    of which
  • In arrears 181 to 360 days 6,561 (Q4 2012 6,822) [Change in period: -261 or -3.8%]
  • In arrears 261 to 720 days 9,267 (Q4 2012 9,058) [Change in period: +209 or +2.3%]
  • In arrears over 720 days 8,932 (Q4 2012 7,734) [Change in period: +1,198 or +15.5%]

Total BTL arrears cases over 90 days outstanding 29,369 (Q4 2012 28,366) [Change in period: +1,003 or +3.5%]
% of loan accounts in arrears for more than 90 days 19.7% (Q4 2012 18.9%) [Change in period: +0.8%]

Repossessions:
BTL properties in possession - at end of Q1 2013 479 (Q4 2012 454) [Change in period: +25 or +5.5%]

  • of which BTL properties repossessed on foot of an Order to date in 2013 30
    (Q1 30)

  • of which BTL properties repossessed on foot of an Order in 2012 Not fully provided
    (Q1 Unknown, Q2 Unknown, Q3 28, Q4 22)

  • of which Residential properties voluntarily surrendered/abandoned to date in 2013 47
    (Q1 47)

  • of which Residential properties voluntarily surrendered/abandoned in 2012 Not fully provided
    (Q1 Unknown, Q2 Unknown, Q3 46, Q4 66)

Restructured Mortgages:
Total outstanding classified as restructured - at end of Q1 2013 21,504 (Q4 2012 21,748) [Change in period: -244 or -1.1%]

  • of which are not in arrears 131,141 or 61.1% (Q4 2012 13,436 or 61.8%) [Change in period: -295 or -0.7%]

So we can see:

  1. Arrears jumped from 18.9% Q4 2012 to 19.7% Q1 2013
  2. Restructured mortgages, NOT in arrears, fell from 61.8% Q4 2012 to 61.1% Q1 2013
  3. 29,369 (19.7% of all BTLs) in arrears over 90 days + 21,504 (14.4% of all BTLs) restructured =
    50,873 or 34.1 % of all BTLs in trouble of some sort (up from 33.4% in Q4 2012)

#20

Look, he has a beard and talks kinda funny. Clearly he’s a socialist…