On the same day that IMF chief Christine Lagarde came to Ireland to check up on us – and even popped into Doheny and Nesbitts for a scoop with Michael Noonan - the central bank dropped their latest mortgage arrears figures on an already weary Irish public.
The numbers are, or course, worse than they were three months ago, which were worse than they were three months before that...
Although we’ve looked at this recently, we did say a few weeks back that we’d review the latest numbers when they came out. And since mortgage arrears is now one of the biggest issues facing Irish people and the country as a whole, we figured it’s worth another short post.
Arrears of 90 days
The Central Bank uses mortgages that are 90 days or more in arrears as their standard measure of how we’re doing. And we’re not doing well. They say that at the end of December 2012, there were 94,488 mortgages in arrears of more than 90 days. That compares with 86,146 in September. It’s an increase of 8,342 – or 9.7% in just three months. That’s quite a lot.
If you look at it over the course of a year though, mortgage arrears of 90 days or more have gone from 70,945 in December 2011 to 94,488 in December 2012. An increase of 23,543. That’s 25% in just a year.
Here’s something very strange though…
The central bank says that as of December 2012 there were 792,096 mortgage accounts in Ireland. That’s an increase of 30,142 over the 761,954 mortgages they recorded for September. And despite the increase in the number of mortgages, their total value has actually gone down by about half a billion.
It does seems highly improbable though that AIB, Bank of Ireland and Permo doled out more than 30,000 mortgages in the run up to Christmas. Even during the craziest days of the Celtic Tiger, 10,000 new mortgages a month would have been quite a feat. But the Central Bank has based the rest of their calculations around this figure which certainly pulls some of their sums into question.
They say that there are now 11.9% of mortgages in arrears of 90 days or more compared with 11.4% in the previous quarter. But actually, if you strip out those 30,000 mysterious mortgages, it's more like 12.4%.
Anyway, at bonkers.ie we think that the using the 94,488 accounts that are behind by more than 90 days, while alaming, does not fully capture the magnitude of the mortgage arrears problem. We think that the 49,363 that are in arrears of up to 90 days should be included too. Then there’s the 42,031 mortgages that have been restructured and are not considered to be in arrears.
So as of December 2012, there were 185,882 mortgages in some sort of difficulty. That’s an increase of 6,512 from the 179,370 in the previous quarter.
And so things keep getting worse. Based on the latest Central Bank numbers, 23.4% of Irish households are now having difficulty making their payments. If you strip out those 30,000 mortgages again, that goes up to 24.4% - or one in four.