23/8/2013: IMHO statement on Mortgages Arrears for Q2 2013

Irish Mortgage Holders Organisation (IMHO) issued opinion on today's mortgages arrears figures: https://www.mortgageholders.ie/another-false-start-in-resolving-mortgage-crisis/

My detailed analysis of the figures is here: http://trueeconomics.blogspot.ie/2013/08/2382013-irish-mortgages-arrears-q2-2013.html

23/8/2013: Irish Mortgages Arrears: Q2 2013

Mortgages rears figures are out for Q2 2013 and guess what, things are (predictably) getting worse. I am sure the Government will say that 'getting worse today'='getting better in the future'. As such, we do live in the world where stabilisation = decline in the rate of decline, while a slight uplift on any time series is greeted as an indisputable 'gathering growth momentum'.

What do the numbers of mortgages arrears tell us, spin aside? I highlight main conclusions in bold.

In Q2 2013 there were 919,139 mortgages accounts outstanding (EUR139,883 million in total), of which 770,610 accounts were for primary residences (EUR109,147 million). Primary residences are referenced as PDH accounts in CBofI. The balance of 148,529 accounts  (EUR30,626 million) relate to Buy-to-lets, BTLs.

This means that over the year through the end of H1 2013, the number of mortgages accounts rose 0.4% and their outstanding volumes fell 2.41%. Deleveraging is very slow in the economy, given the crisis scope: number of primary mortgages accounts rose 0.7% and their volume shrunk 2.52%, while the number of BTLs fell 1.1% and their volume shrunk 2.01%. In fact, as the chart shows, deleveraging process so far is not helping the workout of arrears:

Total number of primary accounts in arrears of any duration is up 11.46% y/y, underlying volume of mortgages represented by these is up 9.1% to EUR25.69 billion from EUR23.55 billion a year ago, while amounts in arrears are up 36.46%, breaching EUR2 billion for the first time. This means that, penalties inclusive, the arrears are now attracting ca EUR202 million in roll up charges annually or about 40% of the annual savings that we need to deliver in Budget 2014 from the social welfare funds.

Total number of BTLs in arrears was up 15.06% y/y and the amounts of mortgages outstanding for the BTLs in arrears rose to EUR10.94 billion - up 11.45% y/y, while the actual cumulated levels of arrears hit EUR1.207 billion, up 43.63% y/y.

All in, there were 182,840 accounts in arrears, representing cumulative amount outstanding of EUR36,634 million and cumulated arrears of EUR3,231 million. These were up: +11.39% y/y for account numbers (+19,924 accounts), +EUR3.267 billion or 9.79% y/y for mortgages outstanding, and +EUR 907 million or +39.05% y/y for actual arrears.

Repossessions accelerated, but remained subdued overall, rising to 1,503 accounts (1,001 accounts for primary residences). This represents a y/y increase of 13.69% for all accounts, 6.04% rise for primary residences and 32.8% jump for BTLs.

Restructured mortgages numbers declined in Q2 2013, from 106,612 accounts to 100,920 accounts over the period of 12 months through June 2013. This breaks down as per decline of 6.57% for primary residences from 84,941 to 79,357 accounts, and a decline of just 0.5% for BTLs from 21,671 to 21,563 accounts.

Performance of restructured mortgages somewhat improved, although we do not know as to why this was the case. Restructured mortgages that were not in arrears as percentage of the total number of restructured mortgages has improved from 47.35% to 53.31% for primary mortgages, and from 51.17% to 61.13% for BTLs.






And some scarier figures for the end:

• Total number of mortgages at risk of default or defaulted (mortgages in arrears, mortgages restructured and not in arrears, and repossessions) rose to 239,834 in H1 2013 (up 11.27% y/y)

• Total number of primary mortgages at risk or defaulted rose to to 186,202 in H1 2013 (up 9.94% y/y)
• Total number of BTL mortgages at risk or defaulted rose to to 53,632 in H1 2013 (up 16.12% y/y)

• 20.26% of all primary residential mortgages were in arrears or at risk of default in Q1 2013, against 18.50% in Q2 2012.
• 36.11%of all BTL mortgages were in arrears or at risk of default in Q1 2013, against 30.75% in Q2 2012.
• 26.09% of all residential mortgages were in arrears or at risk of default in Q1 2013, against 23.55% in Q2 2012.
• By volume of mortgages outstanding, 33.35% of the total mortgages pool or EUR46,618 million were mortgages either in arrears, or restructured at the end of Q2 2013, up on 29.51% (or EUR42,258 million) at the end of Q2 2012.

21/6/2013: Irish Mortgages Arrears Q1 2013

At last, with a delay of some 4 weeks we have the Mortgages Arrears data for Ireland for Q1 2013. The delay was caused by (my sources tell me) a reporting glitch from one of the institutions. 

At any rate, the CBofI release of the data does not seem to fit any of the conspiracies theories bandied about, so let's assume that it was a glitch. That raises a question - what sort of a glitch can disrupt reporting of something as simple as arrears without having any effect whatsoever on any lender's other operations? I shall leave this question for you to ponder.

What do the figures tell us? As usual, my suggestion is - ignore the spin in the media, read CBofI own release, read https://www.mortgageholders.ie/ position (due tomorrow am) and let's focus on raw numbers here.

In Q1 2013, number of outstanding mortgages accounts relating to principal dwelling houses/residences (PDH) stood at 774,109, down on 792,096 in Q4 2012 - a decline of 2.27% q/q, but an increase of 1.3% y/y. With BTLs added, total number of residential mortgages in the country stood at 923,504 or 2.01% below Q4 2012 and 20.9% above Q2 2012 when reporting began. Much of changes in the total numbers of mortgages in recent quarters is accounted for by classification changes.

While the number of mortgages outstanding dropped by 2.27% for PDH, volumes of loans relating to mortgages decline by far smaller 0.79%.

So observation 1: exits remain based predominantly on pay downs of older vintage, smaller mortgages, leaving the remaining pool of mortgages more toxic.

Total number of accounts in arrears in relation to PDH stood at 142,118 in Q1 2013, down 1.2% from 143,851 accounts in Q4 2012, but up 15.6% y/y. Total outstanding amounts relating to PDH accounts in arrears was up 2.85% q/q at EUR25.485 billion (up 11.21% y/y) and underlying volumes of accumulated arrears rose to EUR1.932 billion (up 7.81% q/q and 39.87% y/y).

Observation 2: Marginal decrease in arrears-impacted mortgages accounts was associated with deeper deterioration in terms of the volumes of PDH mortgages impacted by arrears. The problem got slightly more concentrated and much more toxic.

Number of accounts in arrears in relation to BTL rose to 39,371 in Q1 2013, up 3.73% q/q and up 13.4% y/y. Total outstanding amounts relating to BTL accounts in arrears was up 2.84% q/q at EUR10.891 billion (up 10.94% y/y) and underlying volumes of accumulated arrears were at EUR1.178 billion (down 1.29% q/q and up 40.13% y/y). Note: y/y comparatives for BTLs are only referencing 9 months period since the end of Q2 2012 - the first period for which we have data available.

Observation 3: BTLs continued to tank across the board, although cumulated arrears amounts did decline q/q. Assuming there were no reclassifications, this suggests some write-offs by the banks of defaulted loans.

Total (PDH+BTL) number of accounts in arrears stood at 181.489 in Q1 2013, down 0.17% from 181,806 accounts in Q4 2012, but up 11.4% on Q2 2012 - the earliest for which we have data available for BTL. Total outstanding amounts relating to all mortgages accounts in arrears was up 2.85% q/q at EUR36.376 billion a rise of 9.02% on Q2 2012. However, the core number, relating to cumulated arrears has jumped significantly more than any other arrears-related parameter. This rose to EUR3.11 billion in Q1 2013 up 4.17% q/q and +33.83% on Q2 2012.

Observation 4: across all residential mortgages, the problem of arrears became slightly marginally more concentrated and significantly more toxic.

In Q1 2013, 185,263 PDH mortgages accounts were either at risk of default or defaulting (the category that includes, per my methodology, all mortgages in arrears, all repossessions and all mortgages that are restructured and currently are not in arrears), which is 0.81% down on Q4 2012 and +13.97% up on Q1 2012. At the same time, there were 52,991 BTL accounts at risk or defaulting, up 2.15% q/q and up 14.74% y/y. Which means that across all mortgages, the number of accounts at risk of default or defaulting declined marginally from 238,663 to 238, 254 between Q4 2012 and Q1 2013. The number was up 10.53% y/y.

At the end of Q1 2013, 20.1% of all PDH mortgages accounts were at risk of default or defaulting, up on 19.8% in Q4 2012. The percentage of BTL mortgages that were at risk of default or defaulting in Q1 2013 was 35.5%, up on 34.5% in Q4 2012. 

Among all residential mortgages in Ireland, in Q1 2013 25.8% were at risk of default or defaulting, up on 25.3% in Q4 2012. 9 months ago that percentage stood at 23.6%, implying a swing up of 2.2 percentage points in 9 months or an annualised rate of increase in the incidence of risk of default or defaulting of 2.94 percentage points.

Update:  Here is a link to IMHO statement on today's data: https://www.mortgageholders.ie/irelands-mortgage-crisis-is-blowing-out-of-control/

7/3/2013: Irish Mortgages Arrears Q4 2012

Mortgages arrears data for private residences in Ireland for Q4 2012 was published today by the Central Bank of Ireland. Few surprises.

As expected, arrears rose. Unexpectedly, the rate of increase was much much slower than before in q/q terms and slower in y/y terms. As encouraging as this might sound, there are some points of concern outlined below. Here are some details of data dynamics first:

1. In Q4 2012 there were a total of 792,096 accounts relating to private residential mortgages in Ireland - a massive y/y increase from 765,267 accounts in Q4 2011 due to 'reclassification' of some mortgages accounts.
2. This 'reclassification' made historical comparatives in terms of, say, arrears as % of the total mortgages, utterly useless. This is how Irish official stats go: relabel, re-order, and if it makes things look better by coincidence - spin. 
3. Total number of mortgages in arrears for private residences rose from 141,389 accounts in Q3 2012 to 143,851 accounts in Q4 2012 - an increase q/q of 1.74%, well below any q/q increase since the beginning of the series. Average increase since Q3 2009 when the data started stands at 6.51%.
4. Y/y total number of mortgages in arrears increased 21.43% in Q4 2012, the slowest rate of annual increases since the beginning of the series and below the average of 27.77%.
5. Overall, in Q4 2012, 18.16% of all mortgages still outstanding in the country were in arrears. Adjusting for the CBofI 'reclassification' of mortgages accounts to allow for more direct historical comparative, 18.85% of all mortgages were in arrears. 
6. Number of mortgages at risk or defaulted (defined as mortgages currently in arrears, restructured and not in arrears, plus repossessions) has risen in Q4 2012 to 186,785 (or 24.48% of the total adjusting for 'reclassifications', 23.58% based on official data) from 185,933 in Q3 2012. This implies a rise of 0.46% q/q and 19.61% y/y. Both represent the slowest rates of increase in series (short) history.

Two charts to illustrate:

Good news: the rates of arrears build up have slowed down in Q 2012. 

Bad news, getting worse slower is not the same as getting better. Especially given the deterioration tallied from 2009 through today. 

Worrying side: impacts of property taxes, banks guarantee lift-off, repossessions orders regime change, and personal insolvency 'reforms' are not visible in the current latest data. All represent a threat of accelerating arrears once again. 

Real news: just under 1/4 of Irish private residences-linked mortgages are now at risk of default, in arreas or defaulted and some 650,000-700,000 people are currently impacted by this crisis to the point of being unable to meet the original conditions of their mortgages.

13/12/2012: Mortgages at Risk: Acceleration in the Trend

In the previous post (here) I detailed the trends in mortgages arrears in Ireland based on Q3 2012 data released today. Since then, I have seen some comments on the 'dynamics' of the mortgages arrears, suggesting that things are 'getting worse more slowly'.

This is simply incorrect. Here's a chart graphically showing acceleration of overall crisis since Q2 2012:

Note that data through Q3 2010 is imputed by estimating back trend from Q4 2010-Q2 2012 data reported by CBofI. Hence, the jump in orange line at Q3-Q4 2010.

13/12/2012: Irish Mortgages Arrears - Q3 2012

Q3 2012 data for Irish residential mortgages in arrears is out and here is the first summary of horrific details:

• Total number of residential mortgages in arrears more than 90 days rose from 47,627 to 49,482 between Q3 2011 and Q3 2012 - a rise of 3.89% y/y. This marks acceleration in the rate of increase in arrears 90 days + from 1.13% in Q2 2012.
• Total number of mortgages in arrears less than 90 days rose to 86,146 in Q3 2012 from 62,970 in Q3 2011 - an increase of 36.8% y/y, compared to a rise of 45.3% in Q2 2012.
• Total number of accounts in arrears (90 days and over, and under 90 days) rose from 110,597 in Q3 2011 to 135,628 in Q3 2012 - an annual rate of growth of 22.63%. In Q2 2012 the rate of increase was 25.20%.
• Total number of accounts at risk of default (currently in arrears, plus restructured and not in arrears, plus repossessed) rose to 180,314 in Q3 2012, up 6.5% q/q and up 21.95% y/y. In Q2 2012 the rate of annual increase was 20.92%.
• Overal value of mortgages at risk now stands at €31,835,683,000 up 6.0% q/q and 19.8% y/y

Charts to illustrate:

Let's make it simple:

1. Between Q3 2011 and Q3 2012, the % of loan accounts in arrears for more than 90 days rose from 8.1% or all accounts (10.8% of outstanding mortgages values) to 11.3% (15.1% of outstanding mortgages values).
2. A a year to Q3 2012, the number of mortgages at risk of default or defaulted (including mortgages in arrears, restructured and current not in arreas and repossessions) rose from 147,857 to 180,314
3. In Q3 2012, mortgages at risk accounted for 24% of all mortgages outstanding accounts and 29% of the total value of outstanding mortgages, up from 19% and 23%, respectively, in Q3 2011.

That's right - almost 1/4 of all mortgages accounts are now at risk or have defaulted, and almost 30% of the total value of outstanding mortgages is at risk.

Updated: here's the Irish Mortgage Holders Organization response to today's Arrears figures.

23/8/2012: Mortgages Arrears in Ireland - Q2 2012

At last we have the data for Q2 2012 mortgages arrears in Ireland, and these are ugly. That's right, folks - ugly.

Let's keep in mind: Irish average household size is at 2.73 persons per household as per Census 2011.

Top numbers:

• Total number of outstanding mortgages in the state stood at 761,533 in Q2 2012, down 0.34% q/q and down 2.03% y/y. In the previous quarter (Q1 2012) the rate of mortgages decline was 0.63% q/q and 2.34% y/y. This suggests a slowdown in mortgages repayments (deleveraging) in the economy, despite the Government claims to the economic stabilization (something that would be consistent with accelerating deleveraging).
• Outstanding balances of mortgages are at €111.99 billion in Q2 2012, a decline of 0.62% q/q and 2.69% y/y. Again, compared with Q1 2012, there is a slowdown in deleveraging (-0.70% q/q and -2.82% y/y in Q1 2012).
• Of all mortgages outstanding, 45,165 mortgages or 5.93% (totaling €7.53 billion or 6.73% of all balances) were in arrears less than 90 days. In Q1 2012 the number was 46,284. This is a mew category of reporting and Central Bank deserves credit for continuing to improve data disclosure to the public.
• Of all mortgages outstanding, 17,533 (2.3%) of mortgages were in arrears between 91 and 180 days, with mortgage balance of €3.13 billion (2.79%). Good news, there has been a deecrease q/q in these mortgages - down 3.52% (in Q1 2012 there was a rise of 2.06% in this category) in number of accounts and a drop of 5.73% (against a rise of 1.32% in Q1) in mortgages volumes. Year on year, this category of mortgages arrears is up 11.64 in Q2 2012 which marks a slowdown from 27.5% rise y/y in Q1.
• However, the decline in the 91-180 days category of mortgages in arrears (-640 mortgages q/q) is almost ten-fold smaller than the rise in the arreas 180-days and over category (up 6,261 q/q in Q2). In other words, the decline in mortgages in arrears 91-180 days is explained fully by the rise of mortgages in arrears over 180 days.
• Number of mortgages in arrears in excess of 180 days now stands at a massive 65,698, up 10.53% q/q in Q2 2012 (in Q1 2012 the same rate of increase was 11.89%) and up 64.1% y/y. These mortgages amount to €13.35 billion - which represents a 10.64% q/q increase and a 67.22% increase y/y.
• Using old methodology, total arrears over 90 days now amount to 83,251 mortgages (up 7.24% q/q and 49.3% y/y), with a balance of €16.48 billion (up 7.11% q/q and 52.1% y/y). 
• Thus, currently, 10.93% of all mortgages in Ireland are in arrears 90 days and more, and these amount to 14.72% of total mortgages balances. For comparison, in Q2 2011 these percentages were 7.17% and 9.42% respectively.
• Using newly available data on mortgages in arrears less than 90 days, total number of mortgages in arrears in Ireland is 128,416 (16.86% of all mortgages outstanding) and these amount to €24.01 billion (21.44% of all outstanding balances).
• Now, put the above number in perspective - that is around 350,576 people (actually more, since mortgages arrears are likely to impact younger and larger households over retired and smaller households) in this country who are missing payments on their mortgages.
• In Q2 2012 there were 84,941 restructured mortgages (up 6.56% q/q and 21.63% y/y). The rate of restructuring has declined from Q1 2011 when q/q there was a rise of 7.17% and y/y there was a rise of 26.66%.
• Of restructured mortgages, 47.35% were not in arrears. Percentage of restructured mortgages in arrears has fallen from 56.41% in Q2 2011 and from 48.50% in Q1 2012. Which, of course, means that more an more restructured mortgages are falling back into arrears, implying that the restructuring solutions do not work for at least 53% of mortgages to which they were applied.
• As of the end of Q2 2012, there were total of 169,598 mortgages (22.27% of all mortgages outstanding) that were at risk (in arrears, restructured and not in arrears, and subject to repossessions). This represents (using average household size) 463,003 persons.

Charts to illustrate above trends:

At this stage, there is no point of denying that all restructuring and other 'solutions' deployed by the banks and designed by the Government are not working. The mortgages crisis is raging on. When you look at the third chart above, even using old definition of mortgages at risk (>90 days arrears), the trend up is linear, implying a constant rise in mortgages risk. Even abstracting away from the possible effects of the new insolvencies legislation on mortgages defaults, the trend above suggests that by Q1 2013 we will be close to 150,000 mortgages at risk (using in arrears more than 90 days metric). This would push overall mortgages at risk to beyond 200,000. More than half a million Irish people will be living in households at risk of falling behind on their mortgages repayments. The question I would like to ask of our 'leaders' is "Then, what?"

18/2/2012: Mortgage Arrears Q4 2011

The Central bank of Ireland has published Q4 2011 stats for mortgages arrears. And it's a trend-breaking one. Not quite touching my forecast from Q3 2011 data for 114,000 mortgages at risk (see definition below), but jaw-dropping 108,603 and counting mortgages that were written off since Q34 2010 when more detailed records were first published - closer to 102,200.

Now, let me run through the core details of the data.

The number of outstanding mortgages accounts has fallen from 786,745 in Q4 2010 to 768,917 in Q4 2011 - a drop of 2.19% or 17,247. In previous quarter, yoy decline in mortgages numbers was 1.94% or 15,325. The outstanding balance of mortgages has dropped from €116,683.25 mln in Q4 2010 to €113,477.28 mln in Q4 2011, so yoy Q4 2011 decrease in mortgages balances was 2.75%, against 2.55% decrease yoy in Q3 2011.

Of all mortgages, 17,825 mortgages were in arrears 91-180 days in Q4 2011, an increase of 7.39% qoq and 35.35% yoy. In Q3 2011, qoq increase in same type of mortgages was 5.6% and yoy increase was 33.62%. So the rate of mortgages in arrears 91-180 days category is accelerating in qoq and yoy terms. Mortgages in arrears 91-180 days have accounted for €3,273.8 mln in Q4 2011, which is 7.02% ahead of Q3 2011 and 34.37% ahead of Q4 2010. This means than we are now seeing smaller mortgages (in absolute size) on average entering into arrears. Amounts of arrears in this category rose 10.04% qoq and 13.61% yoy in Q4 2011 to €89.15 mln. This represents another acceleration from Q3 deterioration.

Mortgages in arrears over 180 days (usually seen as mortgages that are extremely highly unlikely to ever rise from the ashes) now stand at 53,086 up 14.5% qoq and 69.4% yoy. Yep, that right, in Q4 2010 there were just 31,338 mortgages in this category. Compare these dynamics to Q3 2011 when same category of mortgages in arrears rose 15.8% qoq and 65.32% yoy. So the dynamics are slightly shallower on qoq but are sharper yoy. Balance of all mortgages in arrears over 180 days now stands at €10,667.02mln - up 14.56% qoq and 72.34% yoy. The dynamics are very much the same as with the number of mortgages - qoq slightly slower growth, yoy accelerating growth.

So total number of mortgages over 90 days in arrears is now 70,911, up 12.61% qoq and 59.32% yoy. In Q3 2011 the quarterly rate of increase in these mortgages was 12.92% and yoy increase was 55.59%. Balance of all mortgages over 90 days in arrears is now €13,490.8mln - up 12.7% qoq and 61.62% yoy, compared to Q3 2011 increase of 14.14% qoq and 58.69% increase yoy. Total amount of arrears registered is €1,117.12mln which is 12.7% ahead of Q3 2011 and 61.62% higher than Q4 2010.

 The above means that a massive 12.29% of all mortgages accounts in Ireland are now in arrears 90 days or over by total volume of mortgages in arrears and 9.22% by the number of mortgages accounts in arrears.

Now, take all mortgages in arrears 90 days or over, add to them those mortgages that were restructured, but are currently not in arrears and the mortgages currently in the process of repossessions. Call this 'mortgages at risk of default, in default or defaulted' or for short, mortgages at risk. Chart below illustrates the stats:

 In Q4 2011 total number of mortgages 'at risk' stood at 108,603 - a number that represents 14.12% of all mortgages in the country. This represents an increase of 8.35% qoq (in q3 2011 qoq rate of increase was 4.44%) and 35.25% yoy.

As chart above shows, there is deterioration in mortgages performance even amidst those mortgages that have been restructured.  Total number of restructured mortgages in Q4 2011 was 74,378, which represents an increase of 6.66% qoq and 25.58% yoy. In Q3 2011 there was a qoq decrease of 0.15%. Of the restructured mortgages, 36,797 were not in arrears in Q4 2011 - an increase of 1.16% qoq and 4.52% yoy. However, while number of restructured mortgages not in arrears rose by 421 in Q4 2011 (qoq), the number of total restructured mortgages rose by 4,644. Which means that some 4,223 restructured mortgages went into new arrears in Q4 2011. Overall, percentage of mortgages that are restructured but are not in arrears has dropped from 59.44% in Q4 2010 to 49.47% in Q4 2011. Restructuring of mortgages now works for less than 50% of restructured mortgages - and that is only within 2 years of the beginning of the entire data on these!

Now, do keep in mind that restructuring was quite severe in many cases. See bottom of CBofI release on this here. And it doesn't seem to work all too well for just over 50% of those entering new temporary arrangements. So what will happen to these families when the 'temporary' arrangements expire?

18/11/2011: Mortgages Arrears for Q3 2011

Data for Irish Mortgages defaults for Q3 2011 was released today by the Central Bank and is already causing some commotions. That is because by the broader metric I deployed recently, including in last week's Sunday Times article (see here), we are now beyond 100K number when it comes to mortgages at risk.

let me un through the figures. Note that the CB has changed methodology for reporting back in Q3 2010, expanding reporting. So I estimated some of the sub-series back to Q3 2009 when the narrower reporting was first introduced. Thus, caution should be applied to taking Q3 2009-Q2 2010 data. Also, note that 2011 figure - corresponding to Q4 2011 - is a forecast based on mortgages arrears dynamics by each subcategory of mortgages.

• In Q3 2011 there were 773,420 mortgages outstanding in Ireland a decline of 3,901 on Q2 2011 (-0.5% qoq) and 15,325 yoy (-1.94%). This represents a drop of 2.7% or 21,189 mortgages on Q3 2009.
• The outstanding value of mortgages has declined €676,166 or 0.59% qoq to €114.41bn down from €115.09bn in Q2 2011 and €117.40bn in Q3 2010. Note that in Q2 2011 Irish household deposits were €87.00bn which implies that Mortgages to Deposits ratio in Ireland is at 131.5% well ahead of the LTDs mandated for the irish banks for all loans at 125.5%.

Of the above mortgages:

• In Q3 2011 there were 62,970 mortgages in arrears 91 days and over with the balance of €12.37bn. This represents an increase of 7,207 mortgages qoq (+12.92%) and 22,498 mortgages yoy (+55.59%). Compared to Q3 2009, the number of mortgages in this category is estimated to have risen by 36,699 mortgages or 139.7%. In terms of value of the mortgages in arrears, the value rose 14.13% qoq and 58.7% yoy. I mentioned in the previous articles on the subject that we can expect faster increases in mortgages in arrears values, rather than numbers as arrears primarily hit most those households that tended to borrow more in the years around the peak of the property markets.
• Repossessions also rose from 809 in Q2 2011 to 884 in Q3 2011 (+75 or 9.27% qoq). Repossessions are now up 69.7% yoy (+363) and are estimated to have risen 501% on Q3 2009 (+737).
• Restructured loans that are no in arrears are down from 39,395 in Q2 2011 (value of these loans was €6.66bn) to 36,376 (€5.93bn) - a decline of 3,019 mortgages qoq or 7.7%. Year on year these mortgages are up 9.7% or 3,212.

Based on the above we can define mortgages at risk and defaulted to include all mortgages that are currently in arrears, all mortgages that are restructured, but are not in arrears and mortgages that went through the repossessions. 

• In Q3 2011 total mortgages at risk or defaulted stood at 100,230 with the total value of €18.3bn, up 4,263 mortgages (+4.4%) qoq and 26,073 mortgages (+35.2%) on Q3 2010. Since Q3 2009 these mortgages rose in number some estimated 125.9%. In value, mortgages at risk or defaulted have risen €803mln qoq (+4.6%) and €10.5bn yoy (+134.7%).

As chart above summarizes, percentage of mortgages at risk relative to overall number of mortgages has risen in Q3 2011 to 12.96% from 12.35% in Q2 2011. The value of mortgages at risk has increased from 15.2% of all mortgages value to 15.99%.

It is worth noting that Q3 dynamics represent a marked slowdown on the rates of increases in mortgages at risk in previous quarters. This decrease is accounted for as follows:

• Total number of mortgages outstanding paydown slowed from -0.65% in Q2 2011 relative to Q1 2011 to -0.50% in Q3 2011 relative to Q2 2011. This means that the base decline was slower, pushing down the percentage change in the relative share of mortgages at risk.
• Number of mortgages in arrears rose +12.9% in Q2 2011 relative to Q1 2011 and this rate was +12.4% in Q3 2011 relative to Q2 2011 - hardly a marked slowdown here.
• Number of mortgages restructured but not in arrears rose +7.5% in Q2 2011 relative to Q1 2011 and declined -7.7% in Q3 2011 relative to Q2 2011 - this is the core driver of mortgages at risk growth slowdown. Unfortunately we do not know if this decline was driven by these mortgages exiting the restructuring arrangement by going into arrears, or returning back to performing mortgages (for how long can these be expected to remain there is another question), or going into new renegotiations for further restructuring.