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COVID-19 payment breaks on residential mortgages

Author

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  • Gaffney, Edward

    (Central Bank of Ireland)

  • Greaney, Darren

    (Central Bank of Ireland)

Abstract

This note describes the characteristics of Irish owner-occupier mortgages at the five major retail banks that were on COVID-19 payment breaks at the end of May 2020. We identify three factors that are particularly related to the prevalence of payment breaks. First, a history of mortgage forbearance or non-performance is strongly associated with payment breaks; about 40 per cent of mortgages on payment breaks had a prior modification. Second, loans originated during the mid2000s peak of mortgage lending were more likely than the average loan to have payment breaks, whereas mortgages from the 2010s were less likely than average to have payment breaks. Finally, there is a close relationship between payment breaks and high loan-to-income ratios at origination, especially among more recent vintages of lending.

Suggested Citation

  • Gaffney, Edward & Greaney, Darren, 2020. "COVID-19 payment breaks on residential mortgages," Financial Stability Notes 5/FS/20, Central Bank of Ireland.
    • Handle: RePEc:cbi:fsnote:5/fs/20
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    File URL: https://www.centralbank.ie/docs/default-source/publications/financial-stability-notes/no-5-covid-19-payment-breaks-on-residential-mortgages-(gaffney-and-greaney).pdf?sfvrsn=4
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    Cited by:

    1. Durante, Elena & McGeever, Niall, 2022. "SME Credit Conditions in the Pandemic Recovery," Financial Stability Notes 2/FS/22, Central Bank of Ireland.
    2. McGinnity, Frances & Russell, Helen & Privalko, Ivan & Enright, Shannen & O'Brien, Doireann, 2021. "Monitoring adequate housing in Ireland," Research Series, Economic and Social Research Institute (ESRI), number BKMNEXT413, June.
    3. McCann, Fergal & Durante, Elena, 2022. "The effects of a macroprudential loosening: the importance of borrowers’ choices," Research Technical Papers 9/RT/22, Central Bank of Ireland.
    4. Áron Drabancz & Gabriella Grosz & Alexandr Palicz & Balázs Varga, 2021. "Experiences with the Introduction of a Payment Moratorium in Hungary," Financial and Economic Review, Magyar Nemzeti Bank (Central Bank of Hungary), vol. 20(1), pages 5-42.

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