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Debt Recovery Update: “Tsunami” of Repossessions Unlikely

03 May 2017

As the economy continues to recover, the predicted "tsunami" of mortgage repossession cases has not materialised. We examine the factors influencing repossession activity in Ireland.

Many commentators have forecasted that there will be many thousands of residential home repossessions by mortgage lenders. However, recent statistics have indicated that the number of accounts in long-term arrears is continuing to fall, with those borrowers in arrears continuing to remain in their homes. 

“Tsunami” fear

The fear of widespread repossession activity was likely based on the high percentage of mortgage account holders in long-term arrears. In addition to this, there was an apprehension that the bottleneck caused by the slow court repossession process, coupled with the traditional reluctance of lenders to repossess residential property assets, was nearing an end.

The courts – recent trends

Recently-reported Courts Service statistics for 2016, which have not yet been published, also suggest that this "tsunami" of repossession activity is not likely to happen.

The statistics indicate that the number of legal proceedings issued by lenders to repossess homes has halved in the past two years. In addition, there was a 20% fall in the past 12 months in the number of repossession orders granted for family homes compared with the previous year. This is despite there being nearly 55,000 mortgage accounts over 90 days in arrears at the end of December 2016. 

The Central Bank – recent trends

Similarly, the latest statistics from the Central Bank do not support predictions of an increase in the number of repossessions.

According to the Central Bank, the number of mortgage accounts in arrears fell even further during the last quarter of 2016, marking the fourteenth consecutive quarter of decline. The number of accounts over 90 days in arrears also declined for the thirteenth consecutive quarter.

This data is illustrative of an improving and growing economy in which nine out of ten restructured mortgage accounts were successfully meeting the terms of their restructure.

Conclusion

The figures from the Courts Service and the Central Bank do not support the view that there has been, or is likely to be, a repossession tsunami. In fact, the level of repossession activity in Ireland to date has been, and continues to be, significantly behind that of most comparable EU countries. This trend is most likely to continue in light of the recovering economy, rising house prices and the high rate of successfully restructured mortgage accounts. 

For more information, please contact a member of our Debt Recovery team.


The content of this article is provided for information purposes only and does not constitute legal or other advice.

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