A new report from Fitch Ratings shows that for the first time since 2005 Irish RMBS loans in arrears by more than three months reported a sustained decline to 17.7% in 2Q15, from their peak of 19.3% in 3Q14 and 18% in the previous quarter.
 
Fitch say this recent change in trend is a result of ongoing servicing activities aimed at resolving long-term arrears cases and an improvement in the domestic macroeconomic environment. However, market data provided by the Central Bank of Ireland shows that the portion of loans in arrears by more than 720 days is still rising, implying that more loan renegotiations are yet to take place.
 
The Central Bank of Ireland announced limits on loan-to-value and loan-to-income ratios on new mortgage loans in January. Fitch believe this is likely to lower credit growth but should have a limited impact on home price recovery.
 
According to Fitch, "The start of the European Central Bank's quantitative easing programme in January triggered a decrease in the three-month Euribor, leading to a fall in mortgage rates since the beginning of the year. Rates are expected to decline further and should remain low in the coming year. This is likely to support home price recovery, partially offsetting the impact of the new mortgage lending regulation."

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