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One thirds of Irish mortgages 2+ years in arrears; Greed. Corruption. Disaster.
Topic Started: 2 Oct 2013, 04:57 PM (1,089 Views)
Veritas
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Looks like Ireland remains totally FUBARED.

Worth noting is the bother those buy to let investors have got themselves into.

And what country has the highest ratio of leveraged up to the bollox buy to let investors?


Australia.

Quote:
 
The scale of the long-term mortgage crisis is growing at an alarming rate, the Central Bank has warned, with a third of households in arrears now two years behind in repayments.

The bank said it is very concerned about a €9.3bn mortgage debt mountain in the main banks.

A review of the most up-to-date data has found one third of accounts for primary homes that are in arrears for more than 90 days are actually behind in repayments for almost two years. The loans were worth €6bn at the end of June.

“The rapidly growing proportion of loans in this category is a source of serious concern, as these loans are effectively over two years behind on their repayments, and the scale of potential losses on these loans could be quite significant,” the report found.

“It also indicates that the various resolution strategies implemented to date have, thus far, had little impact on longer-term arrears.”

Ross Maguire, barrister with the New Beginnings group, said there is no way the arrears crisis can be solved without debt write- offs: “Unless everyone wins the Lotto, this isn’t going away. It is simple mathematics; debt write-offs are coming.”

The value of mortgages in the buy-to-let sector which are behind in repayments to the same extent, two years or 720 days, is €3.3bn.

The Central Bank revealed the scale of the problem after seeking more detailed data on arrears from Bank of Ireland, Allied Irish Banks, Ulster Bank, and Permanent TSB.

Mr Maguire said: “There is a group of people that gave up and they are goosed. It is all well and good to take their house away but what happens to the balance. These people have given up and it’s not good for them or the banks. They are drowning in debt, it’s coming for them at all angles.”

The regulator revealed that arrears of more than 180 days experienced the most significant increase since it began keeping records in 2009. The value of these mortgages increased from €3.2bn to €15.6bn by the end of June.

Overall, in the four years since arrears data started being calculated, the scale of debt-hit homeowners has grown to €18.6bn (£15.5bn) by the end of June — 17% of the market.

The Central Bank said the acceleration has been dramatic by international standards, even if the impact of the recession is taken into consideration.

The review found that the level of arrears of 90 days or more in the buy-to-let sector was valued at €8.7bn at the end of June — 29% of the total outstanding balance on all these type of investment accounts.



http://www.irishexaminer.com/ireland/one-third-of-home-loans-are-two-years-in-arrears-244926.html
Edited by Veritas, 2 Oct 2013, 04:57 PM.
Property acquisition as a topic was almost a national obsession. You couldn't even call it speculation as the buyers all presumed the price of property could only go up. That’s why we use the word obsession. Ordinary people were buying properties for their young children who had not even left school assuming they would not be able to afford property of their own when they left college- Klaus Regling on Ireland. Sound familiar?

The evidence of nearly 40 cycles in house prices for 17 OECD economies since 1970 shows that real house prices typically give up about 70 per cent of their rise in the subsequent fall, and that these falls occur slowly.
Morgan Kelly:On the Likely Extent of Falls in Irish House Prices, 2007
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goldbug
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And when it gets bad enough to have to implement Plan B? Why tell them the truth of course.
Quote:
 

A review of the most up-to-date data has found one third of accounts for primary homes that are in arrears for more than 90 days are actually behind in repayments for almost two years.


So the banks have been propping them up, obviously not forclosing because they would have no one to sell them to at the value owed. It's the U.S. model and wholly unsustainable. You should always have a safety margin when borrowing but no one can account for mass unemployment and crashing prices. Australia Australia, you dodged a bullet but can you dodge the rest.


All ships go down on the falling tide.
Quote:
 

The value of mortgages in the buy-to-let sector which are behind in repayments to the same extent, two years or 720 days, is €3.3bn.

But I thought yield was supposed to cover the costs?
I guess not if you're tennents lose their jobs and walk away.
Shadow was hopelessly wrong about the Gold Bull Market.
What else is he wrong about?
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stinkbug
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A review of the most up-to-date data has found one third of accounts for primary homes that are in arrears for more than 90 days are actually behind in repayments for almost two years.

So in other words, it's a third of accounts in arrears that are behind for almost 2 years, and the total account balance in arrears represents 29% of the investment market.

So how much of the Irish market is buy to let? Obviously they still have lots of problems, but to say that 1/3 of Irish mortgages are 2+ years in arrears is simply not true.
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While it's true that those who win never quit, and those who quit never win, those who never win and never quit are idiots.

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goldbug
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stinkbug
3 Oct 2013, 07:54 AM
Obviously they still have lots of problems, but to say that 1/3 of Irish mortgages are 2+ years in arrears is simply not true.
Quote:
 

The scale of the long-term mortgage crisis is growing at an alarming rate, the Central Bank has warned, with a third of households in arrears now two years behind in repayments.

The Central Bank revealed the scale of the problem after seeking more detailed data on arrears from Bank of Ireland, Allied Irish Banks, Ulster Bank, and Permanent TSB.

Mr Maguire said: “There is a group of people that gave up and they are goosed. It is all well and good to take their house away but what happens to the balance. These people have given up and it’s not good for them or the banks. They are drowning in debt, it’s coming for them at all angles.”

The regulator revealed that arrears of more than 180 days experienced the most significant increase since it began keeping records in 2009. The value of these mortgages increased from €3.2bn to €15.6bn by the end of June.



Yet the Irish Central bank affirms it. Some truths are simply not palatable.
The problem really centres around the fact that a nation can't borrow it's way to wealth under a compound interest banking system.
Shadow was hopelessly wrong about the Gold Bull Market.
What else is he wrong about?
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stinkbug
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goldbug
3 Oct 2013, 10:02 AM



Yet the Irish Central bank affirms it. Some truths are simply not palatable.
The problem really centres around the fact that a nation can't borrow it's way to wealth under a compound interest banking system.
No they don't.

What they are saying is of the loans that ARE in arrears, a third are in arrears by almost 2 years. They are making no comment about how many loans are actually in arrears.

EDIT: OK, did some quick googling, and it seems that 1 in 8 resi loans are in arrears and 1 in 5 buy to let are in arrears.

http://www.ft.com/cms/s/0/a726e2d0-0be8-11e3-8840-00144feabdc0.html#axzz2gbvft2Wc

Still pretty bad, granted, but not as bad as the initial post inferred.
Edited by stinkbug, 3 Oct 2013, 10:46 AM.
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While it's true that those who win never quit, and those who quit never win, those who never win and never quit are idiots.

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Quote:
 
The Most Insane Chart Ever: Irish Mortgage Arrears

Barry Ritholtz - April 3rd, 2013, 7:00am

Ireland’s Homeowners: Global Champions in not Repaying Mortgages

Posted Image

Cyprus? Pshaw. Greece, Italy, Spain Portugal? Puh-leeze.

Ireland sets the bar for what mortgage arrears looks like ina country bankrupted by their financial sector and hoodwinked by a bank bailout.

The chart above, showing mortgage arrears on the emerald isle, may be the single most insane chart I have ever seen.

And the details underlying it are just as insane. Via Matt Phillips at Quartz:

• 25% of Ireland’s home loans are distressed (S&P)

• 11.9% of Ireland’s mortgages late by more than 90 days (Irish Central Bank)

• Deutsche Bank believes its closer to 16%

• 35% of mortgage arrears are “strategic non payments” (Gregory Connor, Maynooth University)

Oh, and the country’s National debt is up 4X as Unemployment rate has risen above 14%.

Read more: http://www.ritholtz.com/blog/2013/04/the-most-insane-chart-ever-irish-mortgage-arrears/
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Welcome to Ireland, where mortgage payments are apparently optional

By Matt Phillips, April 2, 2013

Ireland’s homeowners are the European and perhaps the world champions in not repaying mortgages. The country’s national debt has increased fourfold in about as many years. Its banking system is being kept afloat by borrowing from Europe. And while a change in the law may soon force the banks to start cleaning up their balance sheets, nobody is quite sure how bad a mess they will find there when they do.

Welcome to Ireland, where the hangover is in fact just beginning.

In the last few years, a staggering number of Irish homeowners have simply stopped making mortgage payments. The Irish central bank says that at the end of December 2012, 11.9% of Ireland’s mortgages were late by more than 90 days, up from September’s 11.5%.

And the truth is probably even worse. The chart above, which was produced by Deutsche Bank using Moody’s data, pegs the percentage of Irish mortgages that are three months late somewhere closer to 16% in September. S&P analysts argue that 25% of Ireland’s home loans are in some kind of trouble, either behind on payments, or in foreclosure, or in forbearance, which is when the bank just isn’t collecting payments. (We’ll get to why later.)

Why? To be sure, things are tough in Ireland. The recession has driven unemployment from less than 5% at the end of 2007 to more than 14%. Incomes have crumbled.

But Greece is in an even worse economic crunch. Unemployment is at 27%. The economy has shrunk by 25% since the end of 2007. Newly impoverished people are turning to firewood because they can’t afford heating oil. And even so, the amount of Greek mortgages in late-stage arrears was only 5.1% in November, according to Fitch Ratings.

What’s going on here?

The simple answer is that Ireland is one of the hardest places in the world to drive a family from its home. Though thousands aren’t paying, repossessions of Irish homes remain ”negligible relative to the level of arrears,” according to a recent report by Moody’s analysts.

The most recent update on repossessions from the Irish central bank shows that during the entire fourth quarter of 2012 only 38 houses were repossessed by court order. At a pace like that, it would take more than 620 years to get through the backlog of nearly 95,000 mortgage accounts that are at least 90 days behind on payments.

The chart to the right is a look at the levels of problematic loans—that is, loans in arrears—in Ireland and neighboring Britain. In Ireland, repossessions are effectively non-existent.

In fact, Moody’s analysts note that the number of Irish delinquent on their mortgages shot higher in 2012, just as political discussions centered on the possibility of a large-scale debt forgiveness plan. (It never materialized.) Moody’s suggested that the increase was driven—at least in part—by some who are gaming the system. “The current dearth of repossessions and the recently proposed personal insolvency legislation is starting to result in higher defaults due to moral hazard,” the analysts wrote.

That’s financial-speak for “people think they can get away without paying their mortgage because they know they’re not going to lose their house.” Gregory Connor, a professor of finance at the National University of Ireland in Maynooth, estimates that about 35% of those who have fallen into arrears on their mortgages have done so “strategically.” That is, they can afford to pay, but just aren’t.

Read more: http://qz.com/50615/welcome-to-ireland-where-house-payments-are-optional-apparently
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