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May 14 (Reuters) - (The following statement was released by the rating agency)
In its 1Q14 ‘Mortgage Market Index - Ireland’, Fitch Ratings says that Irish mortgage loans in arrears by more than three months continue to increase, reaching a new high of 18.4% of the current balance in 1Q14, up from 16.7% a year earlier. This has primarily been driven by portfolios with concentrations of buy-to-let loans.
“There are signs that lenders are becoming more willing to consider taking properties into possession,” says Andrew Currie, Managing Director at Fitch’s Structured Finance team. “As the legal process becomes more certain, lenders have begun to selectively enforce their security over properties. However, it is clearly still the last resort as the number of cases remains extremely low, especially relative to the amount of distress in the market.”
Ireland has experienced significant home price increases over the past year, which has been driven primarily by demand for properties in Dublin. Home prices have risen 8.1% over the past year and the peak-to-current correction now stands at 46.7%.
“We expect lenders to negotiate partial loan write-downs for selected borrowers, with the intention of making them sustainably affordable,” says Mr Currie. “Lenders will retain the right to recover the full loan amount in the event that property values rebound sufficiently in the long term.”
Fitch’s ‘Mortgage Market Index - Ireland’ is part of the agency’s quarterly series of index reports. It includes information on the performance of residential mortgages, predominantly from RMBS transactions, but also those held on bank balance sheets. The report sets the housing market against the macroeconomic background and provides commentary on the emerging trends. The report is available at www.fitchratings.com or by clicking the link below.
Link to Fitch Ratings’ Report: Mortgage Market Index - Ireland - 1Q14