COVID-19 payment breaks on residential mortgages

Edward Gaffney and Darren Greaney
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Edward Gaffney: Central Bank of Ireland
Darren Greaney: Central Bank of Ireland

No 5/FS/20, Financial Stability Notes from Central Bank of Ireland

Abstract: This note describes the characteristics of Irish owner-occupier mortgages at the five major retail banks that were on COVID-19 payment breaks at the end of May 2020. We identify three factors that are particularly related to the prevalence of payment breaks. First, a history of mortgage forbearance or non-performance is strongly associated with payment breaks; about 40 per cent of mortgages on payment breaks had a prior modification. Second, loans originated during the mid2000s peak of mortgage lending were more likely than the average loan to have payment breaks, whereas mortgages from the 2010s were less likely than average to have payment breaks. Finally, there is a close relationship between payment breaks and high loan-to-income ratios at origination, especially among more recent vintages of lending.

Date: 2020-09
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