100,000 mort­gages ad­justed

The Irish Times - - Business News -

The scale of mort­gage ad­just­ments in the Ir­ish mar­ket since the fi­nan­cial crash has been larger than pre­vi­ously mea­sured with the terms of al­most 100,000 loans al­tered, new re­search from the Cen­tral Bank shows.

Re­search on bad loans and the State’s mort­gage mar­ket by Fer­gal McCann of the reg­u­la­tor’s fi­nan­cial sta­bil­ity di­vi­sion ex­am­ined five banks and found that close to 100,000 ad­just­ments were is­sued be­tween 2009 and 2016.

Nine out of 10 loans that de­faulted be­tween 2009 and 2016 and had ex­ited de­fault by the end of 2016 did so fol­low­ing an ad­just­ment to their loan.

There was a rapid switch from ad­just­ments of a short-term na­ture to those of a more long-term, sus­tain­able na­ture after 2013. Mr McCann said this was “im­por­tant” con­sid­er­ing that permanent ad­just­ments were as­so­ci­ated with higher re­pay­ment prob­a­bil­i­ties than ad­just­ments of a tem­po­rary na­ture.

On tracker mort­gages, more than 260,000 are vul­ner­a­ble to po­ten­tial ECB in­ter­est rate rises.

The re­search shows that 61 per cent of bor­row­ers in deep ar­rears had en­gaged with their lender by the end of 2016. This fig­ure rose to more than 70 per cent for those with ar­rears of less than 720 days.

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