Banks were nearly five times more likely to repossess houses in long-term arrears than so-called vulture funds in the first quarter of 2018.

According to the latest statistics from the Central Bank, between January and April traditional lenders such as AIB and Bank of Ireland held 29,206 mortgages which had been in arrears for more than 720 days. Of that number, the bank took 432 into their possession – either through repossession, voluntary surrender or abandonment.

That means 1.48 per cent of all properties in long-term arrears to the banks were repossessed in one form or other. The figures include both personal homes and buy-to-let investment properties.

Non-bank entities, including Start Mortgages, held 13,665 mortgages with arrears of more than two years, of which they repossessed 43. That amounts to just 0.31 per cent of the loans that these non-bank entities hold.

In general, Ireland’s repossession rate continues to be extremely low compared with other European countries with high levels of arrears.

Chairman of the Oireachtas finance committee, Fianna Fáil’s John McGuinness, has called for the Dáil to be recalled to progress legislation he introduced last month clamping down on vulture funds following the news that Permanent TSB was selling a tranche of loans to non-bank entity Start Mortgages.

Mr McGuinness and others have been critical of companies like Start taking over mortgages since they entered the market several years ago. In May, David Hall of the Irish Mortgage Holders’ Organisation told the committee that a “tsunami is coming” with 17,000 mortgage holders vulnerable to having their homes repossessed because of the intransigence of banks and the “cancer” of vulture funds.

Making deals

Others such as Prof Martha O’Hagan Luff, of Trinity Business School, have argued that vulture funds are easier to make a deal with than traditional banks which are generally opposed to writing down bad loans.

Residential mortgages in arrears for more than 720 days fell for the 11th consecutive quarter although the Central Bank warned this category now accounts for 90 per cent (€2.6 billion) of the total amount outstanding on mortgages.

University College Cork (UCC) economist and chairman of the Irish Fiscal Advisory Council, Séamus Coffey, said the low number of repossessions was especially surprising given the results of a recent Central Bank study, which showed that more than 44 per cent of loans in long-term arrears have had nothing paid on them for five years.

“In terms of the arrears we have, the number of repossessions is extraordinarily low,” Mr Coffey said. “If you took the UK level of arrears and repossessions and transferred that into Ireland, you would be talking tens of thousands of repossessions.”

Mr Coffey, who studies the number of repossession cases coming through the courts, said there was no evidence of an increase in repossession applications from “vulture fund” mortgage holders.

“The non-bank holders of mortgages don’t seem to be showing up much in the courts. If you look at the court listings they’re still dominated by the mainstream Irish banks – Bank of Ireland, AIB, Permanent TSB, Ulster Bank.”