20pc of Irish mortgage holders behind on their payments

The Irish Times reports that 20 percent of the Irish mortgage borrowers are struggling to make their monthly payments.

This figure is staggering.

According to the article, more than one-third of all Irish mortgage borrowers from four banks are underwater.  For the borrowers in the 2004-2008 boom, more than one-half of them are underwater.

This suggests that there is going to be on-going downward pressure on Irish house prices.

So how is the bailed out banking system holding up under all of this bad mortgage debt?

ALMOST 155,000 mortgage holders are now struggling to repay their homeloan each month.
New figures show that one-in-five homeowners across the country are in trouble with their mortgage repayments. First-time buyers tend to be the worst affected by home-loan difficulties, especially those who bought between 2005 and 2008. 

Almost 63,000 homeowners are in arrears for three months or more. On top of this, close to 70,000 people have been forced to do deals with their lenders to lower monthly repayments. 

When other homeowners who are in arrears for less than three months are added in, it means that one-in-five mortgage holders are struggling to pay their mortgage, Central Bank figures quoted in the latest International Monetary Fund report on Ireland reveal. 

The IMF report states: "On top of the arrears of 90 days or more, there are a significant number of borrowers who have restructured loans or delinquent payments of less than 90 days, bringing the total affected to about 20pc of borrowers at end-2010." 

There are a total of 773,420 residential mortgages, according to separate Central Bank figures. Multiplying this figure by 20pc means that more that 154,684 mortgages are either in arrears or have had to be modified to lower the repayments. 

Most of those who have had to modify their mortgage terms are now on interest-only payment arrangements.

The IMF report points out that 40pc of those who are in arrears for three months (90 days) or more have now been behind on their repayments for a year or more. This works out at 25,188 mortgage holders. 

The value of the average amount of arrears has been calculated by the Central Bank at €27,000, with these borrowers having €200,000 each outstanding on their mortgages. 

More than a third of owner-occupier borrowers from AIB, Bank of Ireland, EBS and Permanent TSB are in negative equity, where the value of the mortgage is greater than the value of the home. But this rises to half of those who bought during the 2004 to 2008 boom. A similar percentage of buy-to-let investors who bought in the bubble are in negative equity.... 

Only half of those who are in arrears are in negative equity. Personal finance experts said this meant that it should be easier for banks to restructure loans. 

The average negative equity amount for those who are not in arrears was €68,000, the Central Bank data from the end of last year, quoted in the IMF report, shows. 

Borrowers who are in arrears owe an average of €84,000 more than their property is worth.