The European Mortgage Federation’s annual compendium of all things mortgage-related is out.
The data is a bit aged, since it refers to what transpired in 2009 — nevertheless, it still provides an exhaustive survey of the entire European mortgage market in one handy document. So, it’s a good resource for anyone seeking a longer-term view of things.
From that perspective the following chart immediately catches the eye, if not sets the scene of travails to come for Europe in 2010:
Nothing quite comes near to the boom and bust experienced in Ireland, does it?
But that’s not really anything we didn’t know.
What is slightly more interesting comes from the EMF’s summary regarding Irish house price deterioration versus foreclosure rates in 2009. These it turns out were amongst the lowest in Europe. As they write (our emphasis):
The changed employment environment negatively impacted on the financial situation of some mortgage-holders. The level of mortgage arrears on owneroccupied properties increased – 3.6% of mortgage accounts were more than 90 days in arrears by the end of 2009.
The level of properties repossessed remained at a very low level however, with all mortgage lenders, including sub-prime mortgage providers, being in possession of less than 400 properties at the end of the year out of a total of 792,893 mortgage accounts. Extensive forbearance is being shown by mortgage lenders towards customers experiencing financial difficulties which were translated into low repossession levels by international standards.
Facilitating customers in financial difficulties was a focus of both policymakers and mortgage lenders in 2009. In February, the Financial Regulator published the Code of Conduct on Mortgage Arrears which set out that a mortgage lender must deal with each arrears case on an individual basis and work with the borrower to explore all viable options in formulating a plan to clear the arrears.
The Code is heavily based on a pre-existing voluntary industry code but also prohibits a lender from initiating legal proceedings until six months have passed since arrears first arose. Mainstream mortgage lenders reinforced this commitment to helping borrowers in financial difficulties with the IBF Pledge to Homeowners to develop a sustainable arrangement with such customers and to monitor that arrangement thereafter.
Which seems to suggest the utilisation of an extend-and-pretend policy on a simply massive scale in Ireland. Sort of like an Irish version of the US’s Hamp policy.
Of course, as we now know, that halfway-house of forbearance (instead of say, full-on principal forgiveness) didn’t really work out too well for Ireland’s banks in the interim — because it neither dealt with the problem nor managed to freeze affairs for long enough to come through the other side of the recession.
Consequently, this should at least be a good warning to any other governments, banks or states following similar forbearance strategies. We should hope.
Related links:
Hamp, what is it good for? – FT Alphaville
The slow death of Hamp, the summer of delinquencies – FT Alphaville
Musings on mortgage modification-obfuscation – FT Alphaville