Dáil Éireann Debate, Wednesday - 26 November 2014
62. Deputy Michael McGrath asked the Minister for Finance if a person in mortgage arrears who has the arrears capitalised as part of an arrangement with their bank will no longer appear on the Central Bank of Ireland and his Department's statistics as being in arrears; his views that this gives a potentially misleading picture of the true nature of mortgage difficulties in the country; and if he will make a statement on the matter. [45552/14]
View answerThe Central Bank has informed me that its quarterly mortgage arrears and repossessions statistics capture figures on mortgage accounts in arrears as well as on mortgage accounts subject to restructuring arrangements agreed between the borrower and his/her mortgage provider.
The Central Bank has confirmed that in a situation where a borrower has the full arrears balance capitalised (so that the arrears balance goes to zero), then they are technically no longer in arrears and therefore the account will not appear in the arrears statistics. It will, instead, be counted under the restructured/rescheduled mortgages heading. These show all restructure arrangements, regardless of whether the account is in arrears or not.
Under the terms of the Code of Conduct on Mortgage Arrears (CCMA), strict criteria are applied by lenders in considering the most appropriate restructuring arrangement(s) to address the specific circumstances of individual borrowers prior to any offer being made. The primary objective is to restructure the mortgage in such a way as to maximise the likelihood of the borrower being able to adhere to the terms of the restructuring arrangement in the medium to long term.
The Central Bank is committed to the quality criteria outlined in the ECB Public Commitment on European Statistics for all statistics published including the Residential Mortgage and Repossessions Statistics. The Mortgage Arrears return was developed following individual and collective discussions with reporting institutions, and agreement on definitions and coverage. The Central Bank undertakes extensive validation and consistency checks. While this can be kept under review, I am satisfied that the mortgage data as published is robust and of good quality.
With respect to the treatment of mortgage accounts subject to arrears capitalisation in the Mortgage Restructures data published monthly by my own Department, the same situation as for the Central Bank data applies. It should be noted, that these are voluntary and unaudited returns by the relevant MART banks, and given the short timeframe in which the lenders provide this information to my Department, and more frequent report requirements, they have not gone through the lender's quality control process for regulatory return purposes.
I believe that both the quarterly Central Bank mortgage arrears and repossession statistical release and the monthly mortgage restructures publication of my own Department show that the number of mortgage accounts in arrears continues to fall and that the number of accounts classified as restructured continues to increase on a quarterly basis. It is also noteworthy that a significant percentage (81.2% at end June 2014) of such accounts are meeting the terms of their restructuring arrangement.
Both the Central Bank and my own Department will continue to keep the situation in respect of mortgage arrears under review.
