Mortgage Arrears. €30bn-40bn Worth Affected Now. Megathread!

The Central Bank published this paper 3 months back entitled

The Irish Mortgage Market: Stylised Facts, Negative Equity and Arrears … 12rt11.pdf

First of all there were around 785,000 Mortgages in the reference period and Half Date from 2004-2008 Inclusive. The other half predate 2004 or were given out 2009-2011.

THIS PAPER concerns the 475,000 of them that we own through our multitude of crap nationalised banks. The other 310,000 odd are with BOSI and Ulster and other peoples problems sorts of banks and not covered. However we can extrapolate should we wish.

Now here is an interesting one.

So one in 1 in 6 residential property loans in arrears is seemingly a topup. Bulgarian adventures gone sour along with the main mortgage. Furthermore the delinquent loans have generally been reqorked somewhat.

and in conclusion of this overview.

Now of the half of Mortgages out there…the 2005-2008 half the most stressed are the 2006-2007 cohort…remembering that trackers and IO mortgages were roaring along for both thos eyears and that the market peak was early 2007.

Now a lot of the IOs matured in the year AFTER the reference year for this statement, the resets Peaked in 2011 an 2012 and we found a lot of current IO and IN ARREARS people did not start off on IO’s but negotiated onto them.

Then they have a crack at the bueno caca.

It would be fair to point out that even if property prices fell 16% last year… and they did…a 20 year mortgage should fall 16% a year in its final 5 years if originally a 20 year term so pre 1997 equity is unaffected while 1998-2004 mortgages did not fall as fast as the market.

This brings us back to that 2005-2008 cohort who have 50% of outstanding mortgages by VALUE.

The problem is that negative equity has continued, house prices fell 16% in 2011 and by now OVER 50% of Mortgages by VALUE…are held on properties in Negative Equity…not forgetting the ones who could sell.

Note that the data is not all 800000 mortgages…only nearly 500,000 of them that we the taxpayers owe…but be crareful as there are more loans than properties backing loans and many of these ended up in Bulgarian adventures so the only security is in the state.

Now the report has been reworked a bit since…last week for the QB…I’m sure Namawinelake will have at it one of the days. … rrears.pdf

We are certainly over 50% of all mortgages ( by value) in Negative Equity now…perhaps at 60%. and around 300,000 out of the 800,000 :frowning: Disproportionately the largest of them .

Namawinelake has the most recent stats to end September 2011 here

It does strike me that the reduction in Outstanding Mortgage Lending to Households from around €100bn to €80bn in 2011 …shown in the ss below…may relect accelerated writeoffs rather than redemptions. It is a remarkably high figure. The book keeping exercise may be well under way already.

I cannot see them stopping until that total Outstanding Mortgages number is south of €40-€50bn either. 2 more years at last years runoff rate should complete the ‘rebuild’ . … turity.xls

For this level of write offs to be occuring, I would guess that it would be mainly the high earners/highly in debted to be obtaining the write offs, for two reasons 1) The weight of debt is just too high in comparison to their potential income (ie 20m debt vs 200k income) and the underlying asset is now potentially worthless. 2) These high earners will have more knowledge of how to play the system considering they will have access to good accountants, solicitors etc.

Also for such a large reduction to take place without large scale public interest, it would need to take place where the amount of people involved don’t number in their thousands. So instead of dealing with 40 people with 500k mortgage’s, write off one guy with 20m instead. And he is likely to stay quiet about it so that his ego isn’t publicly bruised.

The ‘disappearing’ €20bn is more to do with accounting than writeoffs. They are not performing so the CB has moved them off the aggregate books but they are not written off either.

We use to do a lot of accounting stuff around here but as NWL was able to bloggem quicker we sort of gave up on it…thats a tribute to NWL by the way… total ledge that he is. :slight_smile:

So please don’t confuse ‘deleveraging’ with writeoffs. But it is certain that €20bn worth of mortgages were not written off but were marked as not on the prime books for sure according to that CB spreadsheet I linked near the end.

Seamus Coffey still does the digging, I can’t be arsed anymore (and am outclassed when I am :slight_smile: ): … -2011.html

See table 1. Total residential debt (debt on residences) of 147 bn, up 1 bn from 2008…

I might take a slightly different tack, as I’m unanimous about the need to avoid groupthink. Erm.

More seriously, does the paper say €30bn-40bn is affected by arrears or by negative equity? I might be wrong, but I can’t see where that precise connection is drawn.

Its a good paper - which finally provides some information to the question I can’t remember being answered before. This, for me, is the key segment

Put another way, 92% of mortgaged properties with negative equity do not have arrears, while nearly half of properties in arrears are not in negative equity.

That’s a little information to justify decoupling the negative equity issue from the arrears issue.

Ah thanks. NWL certainly simplifies it down so even I can understand it! I’d happily buy him a few pints

Im actually an accountant, trained by a firm that looked at bank books. You can problaby guess which one. I was told by a guy fairly high up that after the proverbial hit the fan, the bankers took a fairly consistent approach to how they wanted to report the impairments. They all wanted to recognise as much impairments as possible appearantly and they were told that they could only recognise what the IFRS standards permitted. The idea was at the time, things aren’t as bad as they seem, recognise as much bad loans as possible as they won’t be getting any bonus that year anyway, and wait a year and write back the impairments so that they could max out their bonuses. Interestingly one particular bank wouldn’t accept any impairments, until they were forced too. The guy didn’t say which bank that was, but I (and most here) have a good idea which bank that was. I think they were the guys who knew the game was up very early on. And knew that there would be no recovery.

Very good. Point taken. The paper entirely skipped the CBs own aggregate figures to my mind. Despite the fact that it provided clarity of sorts. It shows for example that 1 in 5 delinquent mortgages seemingly comes with a delinquent but separate topup attached. Remember that Beemer and that Bulgarian gaff the neighbours once had???

I am unclear as to whether the aggregates show original IO mortgages or reworked arrears clients converted to IO and paying that interest? Reworks do get attention of course.

However the CB paper does not explain the incredible shrinking mortgage book in that CB Spreadsheet, it strikes me that €20bn of Mortgages are no longer marked as carried in the core banks accounts owing to impairments…the rate at which mortgages are actually paid off is around €1bn a year at most so make that €19bn of WFTage just in 2011 alone.

The bulk of mortgages by value are post 2002 and large. The bulk of actual mortgages by volume are smaller and older.

Add some prior and no doubt subsequent WTFage and that incredible shrinking CB number will hit €60-70bn this year. How can such an amount disappear save by impairment …and what causes such an impairment???

A delinquent 2007 era mortgage may be 90 days in arrears, it will likely have €300k outstanding even now. The total arrears will amount to €5000 in 90 days but the entire €300k is impaired. €40bn of mortgage product was pished onto the market in 2006 and €25bn in 2007.

If half of the 2006 and 2007 mortgage book alone *went 90 days over the impairment for those years only would be €30bn *alone ( accounting for some redemption since) and these are the kind of numbers indicated by the CB. If every single outstanding mortgage from 1996 went into 90 day arrears today the impairment would scarce be €5bn.

3,000 delinquent €300k mortgages. Each is 91 days over and holding steady at that number…say.

The arrears is €5k x 3,000 in a steady state. €15m. The impairment is nearly €1bn , also holding steady.

Peak mortgage=Peak risks. Of course pegging them along at 91 days while not getting any further into arrears would be a very useful deleveraging exercise by itself. :nin And are agreed downconversions to IO who did not quite fall 90 days into arrears getting the accounting treatment too??

What element of this is strategic? The state created another property incentive with the moratorium and it has had in some cases the effect of encouraging the principle of “paying the bank last”.

On those Start mortgages repossessions that get reported it is always a car crash and the borrower ceases to make any contribution whatsoever on the loan for years.

I don’t think there will be mass PPR repossessions but there should be a juggernaut of BTL repossessions starting in this next quarter. All those PI managed cases in the NAMA units where a borrower had some development land, some commercial units and then his 20 BTLs as his pension. Some of those guys have been paying nothing for 2 + years now. Its not a case of forebearance or write downs. There’s no pretence of co-operation.

The thing is all those repossessions numbers are crap because there has been repossessions of BTL empires already in BOSI and Ulster etc and it doesn’t get reported anywhere.

  • It doesn’t go before the Court as it is not PPR and is pre 2009 act lending
  • It doesn’t get published in Iris Oifiguil as the borrowing is not in Corporate entities. And the Receiver doesn’t have to lodge an abstract of his dealings or account to the CRO etc.
    It shows up indirectly in the Alsop auction I guess.

But has there been enough Allsop’s activity to suggest substantial numbers of below-the-radar repossessions?

Maybe there has; I don’t know. But have Allsop’s handles a few hundred properties at this stage? Is that the kind of volume you’d expect from the repossession of those BTL empires?

I suppose what’s on my mind is that feeling that I think a few have - which is what’s holding back the torrent of properties. And there isn’t clear evidence of BOSI and Ulster being more gung-ho about getting the stuff sold than anyone else.

I don’t have an explanation, or even anything useful to say. I’m just conscious that I don’t understanding something. A similar point came to mind on another thread:


Look, maybe it will all be clearer in a couple of months. But you have to marvel at how its done.

Indo conflates Neg Eq and Arrears after Central Banks carefully points out they are not the same thing at all. … 16985.html

Negative equity does not impair loan books but missing payments on a mortgage, no matter how small a mortgage, does.

And yet, many people in Negative Equity have no intention of, or need to, move home. Nor are their loans impaired. The worst performers are BTL-IO…some of whom are fully performing on their own homes.

I said the other day

So the Indo goes off and gets someone to check 2Packs figure and rentaquote. Why can’t this Daniel eejit admit he was lurking on the Pin for a story??? :frowning: Rentaquote is Dermot O Stockbroker somebody.

there is more

OK. So that is 10% of all Mortgages, by value, in arrears

Number 768,917
Total Outstanding Balance €113,477,283,000

Of which total the following are in arrears

In arrears 91 to 180 days Number 17,825 Value €3,273,772,000
In arrears over 180 days Number 53,086 Value €10,667,015,000

Value of all Mortgages 90 day+ in arrears. €13.94Bn

Messy Bits.

Restructured mortgages: Total residential mortgage loan accounts outstanding that are
classified as restructured - at end of quarter (Note 11)
Number 74,379 Value €13,290,957
Of which: Not in arrears 36,797 €6,100,786

( Note 11) The data at the end of the quarter is the total stock of restructures to date. Accounts that are restructured but possess arrears greater than 90 days will have already been included in the over 90 days arrears section of this return.

So we can classify the Not in Arrears €6.1bn as ‘underperforming’ and when added to the €13.94bn the combination of In Arrears and Restructured (not in arrears) but evidently Underperforming gives us €20bnno questions asked. :frowning:

Then we have mortgages that have not been restructured and are not in arrears of over 90 days+. Dunno precisely what that number is but it should be added to the €20bn. W do include restructured not in 90 days arrears thereafter in the underperforming stats.

Previous quarter, … 202011.pdf

Mortgage stock €114,4 bn of which.

€12.4 bn in arrears over 90 days.
€5.9bn restructured not in arrears.

Total €18.3bn.

The value of mortgages falling into either category grew almost €2bn q on q.

"Another 37,582 mortgage accounts which have been restructured are also in arrears in some way. This figure includes mortgages which were in arrears before restructuring, and those that have slipped back into arrears after restructuring.

This means that 107,708 mortgages were either in arrears or had been restructured, up from 99,346 at the end of September.

A total of 109 repossession orders were granted by the courts between October and December. In total, lenders too possession of 133 properties, of which 83 were voluntarily surrendered or abandoned. This represents a drop of 18% from the third quarter."

So, increase in arrears, decrease in repossessions. :unamused:

Are there any figures available which outline the amount and value of mortgages that are shifting from I/O to I & C ?

There are some in the links I just provided. However one number I never saw anywhere is contractual payment holidays.

Most post 2000 mortgages have inbuilt contractual rights to IO periods and payment holiday periods, often to both where they can take 3 or 6 months off and then resume payments as before or take a holiday and then an IO.

These are not arrears as they are within the terms of the mortgages. One giveaway is where the number of 180day plus arrears mortgages grows more strongly than that for 90 day+ eg they never go through the 90-180 phase as the bank gives them their contractual holiday.

Then they run out of contract holidays and are classified straight to 180day+ arrears. This should show over a year of q stats.

This requires some clarity from the CB, even if only to show they know it might happen.

Doesn’t that just perfectly encapsulate the entire (mis)management style of this crisis - i.e. fudge the figures as much as possible and pretend that it’s not as bad as it is.
But in the end the true figures will have to emerge.

Well spotted 2Pack.

I wonder is the number of repossessions linked to the Start Mortgages case which I heard has put off lenders trying to take back assets.

What is the definition of arrears for 90 days? As in, if I miss my December payment, but make my Jan and Feb payment (due on say the first) does this mean at the end of Feb, I would be 90 days in arrears or 30? or another number given that the interest on the higher principle would be due given I didn’t pay off the Dec payment.

Thats a 30. You must miss 3 payments in 3 separate months ( not even consecutive ) and not make them back in between in order to hit 90 days in arrears.


So can anyone tell me precisely how the Central Bank ‘disappeared’ €17.2bn worth of residential mortgages between September and October 2011.

Page 114 of 172 … 0Q%201.pdf

These may have been converted into some class of ‘security’ if you look at the Aggregate table

Page 118 of 172 same link.

Interesting. It must be linked to LTRO I presume.