* Number of troubled mortgages up 8 percent since end-2011
* Unemployment, falling house prices make repayment tougher
* Big risk that losses exceed stress test results-analyst
By Conor Humphries
DUBLIN, May 25 The number of problem mortgages
in Ireland grew 8 percent in the first three months of the year,
increasing pressure on banks and highlighting the government's
problems in trying to revive the economy after a property crash
and years of austerity.
More than one in seven Irish home loans are not being fully
repaid and repayment is getting more difficult as unemployment
remains stubbornly high and house prices keep falling, figures
from the Central Bank showed on Friday.
A total of 116,288 mortgages were either in arrears or had
been or had been restructured, up 8 percent compared with the
start of the year.
"Mortgage debt is the biggest problem that the Irish economy
will face over the next couple of years and there is no sign
this is getting any better," said Dermot O'Leary, Chief
Economist at Goodbody Stockbrokers.
While the banks have booked huge losses on their bloated
commercial property books, relatively few residential loans have
been written off. The central bank, which has been working with
banks on schemes to ease pressure on struggling mortgage
holders, has described the arrears as one of the biggest
challenges facing the country.
Stress tests carried out as part of Ireland's EU-IMF bailout
have prompted banks to bulk up their balance sheets to deal with
rising arrears, based on an assumption that 6.7 percent of their
combined mortgage book would never be paid back.
But a report from the European Commission warned last year
that losses could be higher than anticipated.
"There is a very real risk given these numbers that in terms
of mortgage books the losses will be greater than the adverse
stress test scenario," O'Leary said.
The proportion of loans in arrears for more than 90 days was
10.2 percent at the end of March, up from 9.2 percent at the end
of last year.
The figures only include owner occupiers and not investors
who bought properties to rent out, which represent some 22
percent of outstanding mortgages according to research carried
out by the central bank last year.
The government, which needs the economy to grow to help it
cut its own mountain of debt, announced proposals in January for
new personal insolvency and bankruptcy regimes.
But insolvency experts have said it is too soon to say how
the new rules, which have not been finalised, might help.
Highlighting the level of forbearance being shown by
lenders, repossessions since the central bank started issuing
data in late 2009 stood at just over 1,050 at end-March, far
below the 40,000 repossessions assumed in the stress tests.