IMF head Christine Lagarde

12% of residential mortgages and one-in-five buy-to-let mortgages are in arrears. Arrears are defined where mortgage repayments are late by 90 days or more. However, a significant number of mortgages that are late by one and two months are not categorised as in arrears. Additionally, many more mortgages do not show up on arrears statistics where banks reach repayment agreements with borrowers, including interest-only arrangements.

Under pressure

Irish authorities are under increasing pressure to tame the sharp rise arrears despite interest rates falling to a record low. Since the beginning of 2013, there has been a concerted effort led by the Irish Central Bank to get the growth in residential mortgage arrears under control.

The growth in mortgage arrears has been a key concern of the bailout troika of the IMF, ECB and EU.

Completing its tenth review of Ireland’s bailout programme, which also saw it release the final €950m of its loans, the IMF said there needed to be resolution on the 25% of loans that are currently non-performing which was vital before the country enters the European banking union, and ahead of European stress tests due to take place next year.