TL;DR: Mortgages in arrears have dipped by 3.5% in Q1 2023, marking a notable decline thanks to fewer accounts in long-term arrears. The Central Bank of Ireland indicates a record low in accounts overdue by more than 90 days, while the total mortgage landscape still reveals a significant outstanding balance of €110bn.
As Ireland navigates its post-pandemic economy, the latest figures from the Central Bank offer a glimmer of hope for homebuyers and property owners alike. The recent report reveals that the number of residential mortgages in arrears has decreased by 3.5% during the first quarter of 2023, largely attributed to a steep decline in accounts overdue for more than 90 days. By the end of March, approximately 700,000 residential mortgage accounts were on the books, amounting to a staggering total of €110bn in outstanding balances.
Of this total, just under 35,000 accounts—or about 5%—were reported in arrears. Critically, this represents a reduction of 1,257 accounts since the end of December, a statistic that will be welcomed by financial analysts and homeowners alike. Notably, the report states that the decline was “driven entirely” by a drop in long-term arrears. Specifically, accounts overdue by over 90 days fell to just 21,302, marking the lowest ratio ever recorded.
A deeper look into these figures reveals that mortgages in arrears for more than a year stood at 15,807, with an outstanding balance of €3.7bn, accounting for a staggering 61% of the total arrears. It’s clear that while some may be emerging from financial strife, there remains a considerable portion still struggling.
The issue of restructuring also emerged in the report, with 53,818 private residential mortgage accounts categorized as restructured. Interestingly, a remarkable 85% of these accounts are not in arrears, with 88% adhering to the terms of their current restructuring arrangements. This is a positive sign, yet one can’t help but wonder how sustainable these arrangements will prove in a fluctuating economic environment.
Turning to the buy-to-let market, which is often perceived as the wild child of the property sector, there were 46,272 residential accounts with an outstanding balance of €6.5bn. Just over 5,700 of these accounts were in arrears, reflecting a minor decline both quarterly and annually. This segment shows that even landlords are finding some relief, though many still grapple with significant arrears that can’t be ignored.
Legal proceedings are another area of concern. The report highlights that 59% of accounts in arrears lack any formal demand issued, suggesting a significant lag in legal action—a fact that may lead to some safe harbor, but also raises questions about accountability and diligence among lenders.
In a financial landscape that can often feel like a game of Monopoly gone wrong, lenders took possession of 27 private homes in the first quarter, while buy-to-let properties faced their own share of takeovers. With 120 residential properties and 45 buy-to-let properties now with lenders, it appears the keen eye of the law is watching over these transactions.
While the numbers paint a cautiously optimistic picture for the mortgage market, they also conjure up the specter of what ifs. The decline in arrears might be attributed to economic recovery, but could also signal that some individuals are simply postponing the inevitable—a reality that raises eyebrows and questions about the long-term health of our housing market.
Did you know that as of the end of 2022, a full 10% of all mortgage accounts in Ireland had been restructured? That’s a staggering statistic that reinforces just how intricate and sometimes precarious the Irish mortgage market remains.
