Long-term mortgage arrears: Analytical evidence for policy considerations

Jane Kelly, Paul Lyons, Fergal McCann and Eoghan O'Brien
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Paul Lyons: Central Bank of Ireland
Fergal McCann: Central Bank of Ireland
Eoghan O'Brien: Central Bank of Ireland

No 8/FS/21, Financial Stability Notes from Central Bank of Ireland

Abstract: There are currently an estimated twenty nine and a halfthousand primary dwelling mortgage loans in arrears of more than one year in Ireland. These unresolved cases are a legacy of the pre-COVID era, with most arrears beginning during the previous crisis. It remains a priority for the affected borrowers, lending institutions, and the wider Irish financial system that policy solutions are found for these cases. The appropriate solutions will vary depending on the financial circumstances and level of engagement of borrowers. In this Note we use granular information on a sample of long term mortgage arrears borrowers to highlight the financial vulnerability and repayment capacity among borrowers who have previously engaged with a retail bank. We link these findings to the suite of potentially available solutions for distressed debt resolution that might be required. A cohort-based approach will be required, with no “one-size-fits-all” solution likely, given the variation in financial situation across the sample.

Date: 2021-07
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