Rise in number of restructured mortgages reflects responsible lender/borrower management of arrears

August 29, 2011

• Downward trend continues in court proceedings issued by mainstream lenders

The Irish Banking Federation (IBF) notes from today’s Central Bank statistics on mortgage arrears that the number of borrowers whose mortgages have been restructured has risen to 69,837.  In IBF’s view this is the expected outcome of a deteriorating economic situation for some borrowers and it illustrates that mainstream lenders are working responsibly with their customers to manage the situation where the basis for doing so exists.

The increasingly difficult economic circumstances in which some borrowers find themselves today has, not surprisingly, given rise to an increase to 7.2% (of all private residential mortgage accounts) in the level of arrears of 90 days or more.  While the vast majority of borrowers continue to meet their mortgage repayments, those borrowers facing difficulties are being assisted where there is any reasonable basis for doing so.

This is reflected in the 69,837 restructured mortgages now in place – of which 56% are not in arrears - and in the continuing quarter-on-quarter downward trend in the number of new court proceedings issued by mainstream IBF-member institutions (down 28% in Q2 compared to Q1 2011).  Significantly, while recording an increase, the level of repossessions still remains comparatively low – 22 per 100,000 mortgages here compared to 80 per 100,000 in the UK.

“These latest official figures show that IBF members are effectively applying the statutory Code of Conduct on Mortgage Arrears, the Standard Financial Statement and other voluntary measures to work constructively with customers in difficulty”, states Pat Farrell, IBF Chief Executive.  “As a result, the figure that we would expect to see increasing – namely the number of restructured mortgages – is doing just that.  And this is where the focus of IBF member institutions will most usefully remain.”

IBF strongly encourages borrowers who are under pressure with their repayments to communicate with their lenders in order to find a workable arrangement that will assist in the management of their financial difficulties and help to avoid repossession.

Note

The Irish Banking Federation (IBF) is the leading representative body for the banking and financial services sector in Ireland, representing over 80 member institutions and associates, including licensed domestic and foreign banks and institutions operating in the financial marketplace here.

Further Information: Felix O’Regan, Director, Public Affairs, IBF, tel. 671531, 087 6481644