Wednesday, May 6, 2015

Repossession Statistics Distilled

A piece in yesterday’s The Irish Times opens with the following:

The rate at which homes are being repossessed has increased by more than 500 per cent since last year, according to figures from the Courts Service.

Some 586 repossession orders were granted by the circuit court in the first three months of this year, compared with 95 in the same period last year. Of the 586, some 383 were for primary homes, 97 were for buy-to-lets and 106 were “unknown”.

Somewhat confusingly the opening sentence is disputed later in the piece:

A spokesman for the Courts Service said it was important to note that the making of a court order for possession did not necessarily mean that the applicant had obtained possession of the property affected.

“It is a matter for the person or company who obtained the order for possession to pursue its execution. The Courts Service does not have statistics on the number of actual repossessions.”

It is true that the Circuit Courts (mainly through County Registrars) made 586 possession orders in Q1 2015.  However, the 106 that are in the “other/unknown” category refer to commercial property and other assets over which ownership disputes arise.  These should not be included in any analysis of possession orders for residential properties.

Thus in Q1 2015 there were 480 possession orders granted for residential properties (383 primary dwellings houses, PDHs, and 97 buy-to-lets, BTLs).  This compares to 72 possession orders granted for residential properties in the first quarter of 2014.  How this 72 were split between PDHs and BTLs is not available as the Courts Service data did not break down the data by PDH and BTL until the final quarter of 2014.  In Q1 2015 there was an annual increase of 430 per cent in the number possession orders for residential property granted by the Circuit Courts. 

The 383 possession orders for PDHs represents around 1.3 per cent of the 30,000 households with arrears of more than two years on their mortgage accounts at the end of 2014.  If all of these cases were to result in a possession order being granted it would take another 20 years for all those in arrears of more than two years to have a possession order granted against them.

It should also be noted that there wasn’t a large step-change increase in the number of orders being granted in Q1 2015.  The increase has been seen in the data from the second quarter of 2014, with increases in every quarter since.Possession Orders Circuit Court

Of course, the Central Bank produce similar data, and some timing differences (when they are reported by the banks) and coverage differences (all courts rather than just the Circuit Court) aside, they tell a very similar story.  A analysis of the Central Bank data on proceedings and repossessions back to 2009 is here.  Here is a chart of court orders granted for PDHs to the end of 2014 from the Central Bank figures.

Court Orders Granted

The one-off increase in Q2 2013 is difficult to explain but is in the Central Bank release:

During the second quarter of 2013, legal proceedings were issued to enforce the debt/security on a PDH mortgage in 270 cases. Court proceedings concluded in 637 cases during the quarter, and in 350 of these cases the Courts granted an order for repossession or sale of the property.

Aside from the Q2 2013 ‘blip’ the increase in orders granted since Q2 2014 is clearly evident, though the Q1 2015 data which will show a further increase based on the courts’ data has yet to be released by the Central Bank.  Unfortunately the Central Bank do not provide the equivalent legal proceedings figures for BTL accounts. 

Of course, the most visible change in the past 18 months has been in the number of court proceedings issued by lenders which is a function of the moratorium from the CCMA and, more importantly, the Dunne judgement.

Court Proceedings Issued

There is significant additional data in the figures produced by the Central Bank including how many possession orders granted are carried through to a court-ordered repossession. 

Both sources confirm that there was a large increase (relative to a small base) in the number of possession orders granted in Q2 2014.  As most orders are granted with a stay, sometimes of up to nine months, there will be lag between the increase in orders granted and actual repossessions.  The Central Bank data shows that there was a jump in the number of court-ordered repossession in Q4 2014 corresponding to the increase six months earlier in court orders granted.  This chart is taken from the previous post.

Repossessions Chart

If we combine the two charts we can get a rough approximation of how the number of possession orders granted translates into court-ordered repossessions.

Orders and Repossessions

The number of court-ordered repossessions is consistently below the number of possession orders granted.  For the entire period the number of court-ordered repossessions is 40 per cent of the number of possession orders granted.  It is not clear how this will be affected when the big jump in the number of orders granted in Q2 2014 feeds through to the repossession numbers when the lag for stays and other delays has elapsed. This can be expected to average nine months or so.

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