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Rise in buy-to-let repossessions ahead

Tuesday, October 16 14:32:25

The Central Bank will become far more aggressive in recommending that banks take more stringent action, including repossessions, on non-performing buy to let (BTL) loans, analysts said today.

The Irish Central Bank confirmed today that the BTL 90-plus day arrears rate was 20pc of the total at the end of the second quarter and 29pc by value.

This means that in both volume and value terms, 90-plus day arrears for the BTL sector are broadly twice the owner- occupier rates of 11pc and 15pc respectively.

This outcome is exactly in line with our analysis of Irish banks' disclosures of non-performing BTL loans," according to an analysis from Davy.

The Central Bank criticised banks, indicating that a 'wait and see' approach has become the strategy of choice in dealing with non-performing loans, with interest only modifications prevalent.

" Today's speech highlights the risk to the Irish economy that non-performing loans are not dealt with adequately. The speech suggests that the Central Bank will be particularly aggressive in recommending that banks take more stringent action, including repossessions, on non-performing BTL loans," the economist said.

The Central Bank published data on mortgage arrears in the buy-to-let (BTL) sector for the first time today. The 90+ day arrears rate was 20pc in Q2 2012, accounting for 29,000 BTL mortgages of the total of 150,000. This is broadly twice the 10.9pc rate for owner-occupiers, accounting for 84,000 mortgages.