Moratorium on court repossessions keeping Irish people in their homes…

And the lenders are adjusting their expectations accordingly… Ronan Lyons has a brilliant piece on the current state of mortgages south of the border. Bad, but nowhere near as bad as the current press would have us believe (if the stats are to be believed):

Central Bank figures show that lenders have restructured 10% of all mortgages. They have also put money aside – taxpayer money, the €5bn that Morgan Kelly was talking about and more – to provide for mortgage write-downs where families are struggling. Not only that, a recent High Court decision makes it much more difficult for lenders to repossess properties. The fact that there are fewer Court proceedings for repossession now than two years ago indicates that banks are not interested in pushing people on to the street, anyway.

It’s hard to tell what this means on the ground, but the differential between the UK and Ireland in court ordered repossessions is substantial. According to Ronan the rate of repossessions in the UK is about fifteen times that of the Republic.

Despite the distressed economy, it seems the Republic is a better place to be under financial pressure than the UK… So long as you can hold on to your job!!

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  • Rory Carr

    “According to Ronan it’s about fifteen times the rate of repossessions in the UK..”

    Could you clarify this, please? Is he saying that the rate of repossessions in the UK is fifteen times greater than the rate of repossessions in RoI?

    Or is it vice-versa as the above statement would seem to indicate?

  • Mick Fealty

    Clumsily put by me, I agree. But follow the link for the required clarification Rory.

  • Alias

    “As of June this year, Ireland has 777,000 residential mortgages worth €115bn.”

    That gives a different perspective to the ‘property bubble’ explanation for Ireland underwriting the eurosystem to the tune of several hundred billion. Allowing for the 43% collapse in the asset value of those mortgages from their peak, the shortfall would be 49.45 billion if all of those mortages were in default. Since their is only 1 billion in arrears, the rest of the several hundred is the cost of europhilia and not a property bubble.

  • Drumlins Rock

    Mick, the other side of the coin, its pretty trickey going bankrupt down there. Think it is probably better getting the things cleared and out of the road rather than dragging on for years and years.

  • IIRC, in the UK if the bank forecloses on your mortgage, you lose your house and your credit rating and that’s the end of the matter. In the Republic you are also on the hook for your negative equity in perpetuity, unless you claim personal bankruptcy. Consequently, the banks have come under enormous political pressure not to foreclose.

  • Mick Fealty
  • Rory Carr

    No, Andrew. In England at least, if the return on the sale of a repossessed propety does not clear the outstanding debt, then the balance remains owing by the dispossessed. But then there is always recourse to bankruptcy, IVA’s and simple negotiation on the ‘blood out of a stone’ basis.

    A friend recently renegotiated a negative equity shortfall of about £30K (thirty thousand pounds), outstanding for decades (well, since the Bloody Friday fiasco). Only days ago, the bank accepted £200 (yes, two hundred pounds !) in full and final settlement.

    She had since bought another home (in a joint mortgage which must have escaped scrutiny) which she is in the process of selling, at a whacking great profit, in order to downsize now that they have split up and her son is off to college.

    Don’t ask me!

  • From my experience of previous recessions, the behaviour of lenders is, to a large extent, dictated by demand in the property market. Once the demand picks up to a certain level, the repossessions start to flow.

    Thus far into the present recession, the behaviour of the banks in both Ireland and England is somewhat consistent with this phenomenon.