Ireland’s economy seems to be getting back onto its feet. After a fourth-quarter contraction, GDP grew at a 2.7% clip in the first quarter. Home prices are rising again. And unemployment continues to decline steadily, though it remains higher than 11%.
And yet Ireland hasn’t come close to sorting out the housing woes that brought down its banking system and, in 2010, sent the country in search of a financial rescue package from its European neighbors. The latest sign of this: the number of people in owner-occupied homes who are more than two years behind on mortgage payments is still on the rise.
In the second quarter, the number of homeowners in this bucket climbed 5% from the first quarter, to 37,066. In a small country like Ireland, that amounts to 5% of all mortgages on owner-occupied houses. (By value, the share of mortgages two years behind on payments is even bigger, at 7.5% of the total.)
Now it should be said that arrears overall—including short- and long-term delinquencies—are starting to decline slightly: 16.5% of all mortgages on principal residences in Ireland were in arrears in the second quarter, down from 17.3% in the previous quarter. But that’s still insanely high by international standards. Consider that a few months back, Fitch Ratings forecast that mortgage bonds from Spain—which is in an even worse economic situation than Ireland—would end the year with roughly 3.4% of loans more than 90 days in arrears. For Ireland, the same number was about 19%.
Why the giant gap? As we’ve written before, for deep-seated historical reasons, repossessions and evictions remain anathema in Ireland. They almost never happen. And that’s why why mortgage payments remain, for the moment, pretty much optional.
In Ireland, you still don’t have to pay your mortgage
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