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Irish Owner-Occupier Arrears Rise at Slowest Pace in Three Years

Irish private residential arrears rose in the fourth quarter at the slowest pace in at least three years, adding to evidence that the worst may be over for the economy.

Some 11.9 percent of the nation’s 792,096 owner-occupier loans were at least three months behind in payments at the end of December, compared with 11.5 percent in September, the Dublin-based central bank said in a statement today. The number of restructured loans fell to 79,852 cases from 81,634. Those whose terms have been eased permanently rose 13 percent to 23,432 during the quarter, the bank said.

“While, at first glance, the overall stock of restructured mortgages has fallen, we note that this masks a double-digit increase in the number of permanent restructures, which are a more sustainable way of addressing troubled loans,” said Philip O’Sullivan, chief economist at NCB Stockbrokers in Dublin.

Prime Minister Enda Kenny said yesterday he’s seeking “to accelerate a solution” to the nation’s mortgage crisis. By value, about 25 percent of all residential loans including buy-to-let were at least three months in arrears or had been restructured at the end of December, little changed from the third quarter, according to Bloomberg News calculations.

Banks are turning to more permanent solutions for loans, including term extensions, permanent interest-rate reductions and split mortgages, where some of the loan is hived off until a borrower’s circumstances improve. About 30 percent of modified loans are now permanently restructured, the central bank said.

The most popular form of forbearance is allowing borrowers to only pay interest, at 37 percent of restructured loans, it said. Extending the terms of loans account for 17 percent, and split mortgages 0.01 percent at the end of December. The central bank started publishing arrears figures in 2009.


Buy-to-let arrears rose to 18.9 percent of such loans from 17.9 percent at the end of September. The number of restructured investment loans fell to 21,800 to 22,182 on the quarter.

The number of buy-to-let properties in banks’ possession rose to 454 at the end of December from 408 at the beginning of the quarter. Lenders repossessed 88 such units in the quarter, while selling 42.

“Repossessions are at an unnaturally low level,” John Moran, head of the finance ministry, told lawmakers at a parliamentary committee meeting in Dublin today.

Repossessed owner-occupier homes fell to 903 from 947 during the final three months of the year. A total of 134 homes were seized by lenders during the quarter, of which 96 were voluntarily surrendered or abandoned. During the quarter, 178 such properties were sold.

Dublin home prices, which have fallen 54 percent from their 2007 peak, rose 2.1 percent in January from the year earlier period. Unemployment has been unchanged at 14.1 percent for the last three months, after tripling to 15 percent in the four years through January 2012.

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