LAURA SLATTERY

MORTGAGE DEFAULTS continued to increase in November. But the Government’s proposed extension to the moratorium on legal proceedings may undermine the ability of banks to source capital from mortgage-backed bond investors, according to the ratings agency Moody’s.

The data shows that among the prime lenders that have parcelled residential mortgages into mortgage-backed funds for the securities market, EBS has experienced the sharpest rise in its loan delinquency and default ratios.

Loans that have been categorised as delinquent for more than 90 days have surged more than 200 per cent and defaults are up 487 per cent at the building society over the 12 months to the end of November.

Mortgage-backed funds relating to loans advanced by First Active, the former subsidiary of Ulster Bank, have the highest delinquency and default ratios.

According to a separate report from Moody’s, the existing obligation on the banks to adopt a six-month moratorium on taking legal action against borrowers in arrears does “appear to be having the intended effect of suppressing current repossessions”.

The Government announced last month it would extend the moratorium to 12 months, a move welcomed by consumer groups, housing charities, advocates for the unemployed and borrowers.

Mortgage defaults continue to increase - The Irish Times - Sat, Jan 16, 2010