What will Irish Banks lose on residential mortgages?

A small amount say Fitch. But thats based on tales from the banks.

The agency expects loan arrears to peak in 2014, and that 40 per cent of loans that are more than 90 days in arrears will begin to “reperform”. Another 40 per cent will be the subject of some type of writedown, with 50 per cent of the debt in this category being written off. The final 20 per cent of loans will see the associated properties being repossessed.

Overall, the agency believes 4.8 per cent of outstanding mortgage balances (ie, €2.2 billion) could be lost by the banks.

via Repossessions for one in five mortgages in arrears, says Fitch – Financial Services News | Business News | The Irish Times – Tue, Dec 17, 2013.

hang on…

As of September 2013 we had 99189 cases over 90 days, with 18.8b in mortgage loans outstanding.  40% of that is 7.5b and if they lose 50% of that book its already 3.75b. Then if we repossess 20% of the cases and presumably sell they will also lose at least 50% . Thats another 1.8b. So we are at 5.6b losses. Then we have the remaining 40% which will re perform..fully it seems.

Unless only really really good houses with high LTV remaining are going to be repossessed im not sure where the Fitch figures are coming from.   Add into the mix the catastrophic figures on Buy to Let (7.7b over 90 days , presumably most should be repossessed and sold at a 50% plus loss, another 3.35b.

Rather than 2.2b in mortgage related losses, which seems low, we could (but hopefully wont) see closer to 10b in mortgage related losses yet to be seen by the Irish banks. No wonder Mario Draghi is concerned
but dont worry… tis but a scratch

flesh-wound

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One Response to What will Irish Banks lose on residential mortgages?

  1. machholz says:

    Reblogged this on Machholz's Blog and commented:
    They have consistently lied to both the Government and their own share holders how any international financial agency would take their word on anything is just laughable why the Irish government will be under forensic scrutiny by the ECB and the IMF for years to come and Fitch says the Banks are OK ? Bull**

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