Mortgages with Non-Bank Lenders

A relatively recent feature of our ongoing mortgage crisis has been the focus on “vulture” funds.  Since the end of 2013 the Central Bank have provided some data on mortgage accounts held by “non-bank lenders” and the coverage of this has increased in recent releases.  Some of these entities are probably not “vultures” as  typically used and may be interested in servicing performing loans rather than trying to work through a package of non-performing loans.

First we can look at the number of accounts held by non-bank lenders.  The data go back to the end of 2013 and we can see that there has been little change in the total number of accounts (PDH + BTL) over the past 18 months or so.

Around 40 per cent of the loans held by these entities are showing arrears of more than 90 days with more than two-thirds of these over 720 days (two years) in arrears.  Non-bank lenders hold 26 per cent of all accounts (PDH+BTL) that are more than two years in arrears and as with the overall number of accounts the number of accounts in arrears as been relatively steady over the past 18 months or so.

These lenders have 9,356 PDH accounts that are more than 720 days in arrears.  The average balance on these accounts is just over €250,000 and the average arrears amount is nearly €70,000.  It is pretty obvious that many of these accounts of three, four or even more years in arrears.

The average balance on the 3,657 BTL accounts held by these lenders with more than 720 days of arrears is €311,000 with an average arrears amount of €111,000 which again indicates that some of the accounts are hugely in arrears.

Today’s data from the Central Bank gave some insight into the restructuring of accounts held by non-bank lenders but it is not clear if the restructures were carried out before the loan was sold by the original lenders.  For what it is worth here are the restructured accounts held by non-bank lenders.

These do not seems like substantial restructures given the scale of the arrears apparent in the loan book.  Exactly half of the restructures are “arrears capitalisation” which isn’t much of a restructure at all.  See here.  The next most common restructure is “reduced payment” which may be only temporary in nature.

And the final extra piece of data this quarter relates to the repossession activities of non-bank lenders:

Non-bank lenders repossessed 15 properties on foot of a court order in the first quarter of 2016.  This represents 0.1 per cent of the 13,000 accounts they have that are more than two years in arrears (and as we noted these entities have had these accounts for at least 18 months now).  A further 57 properties were voluntary surrendered or deemed to be abandoned to non-bank lenders during the quarter.  The release does not indicate the number of legal proceedings issued by non-bank lenders which would be a useful addition if the data was to be expanded further. 

As can be seem below there was an increase in the overall number of court proceedings issued in Q1 for PDH properties but we cannot tell where these originated from.