Find out everything you need to know about the latest economic news in Ireland for September 2014, including mortgage portfolio sales, rising house prices and the demand for more housing.

1. SEPTEMBER 2014
A study released by the Society of Chartered Surveyors estimated that 35,000 new homes are required in Dublin Ireland‟s GDP has grown by 7.7% year on year Bank of Ireland has transferred approximately €223 million- worth of mortgages to Dilosk

2. HML News
Time for a fresh look at free debt advice?
Peter Munro, head of business development – creditors at Payplan, discusses the benefits lenders and customers can enjoy when partnering with a debt advice provider.
The term „customer outcome‟ now dominates dialogue in the collections arena. All firms are tasked with evidencing that they are delivering good customer outcomes and debates have been plentiful around how such things can be measured and quantified.
I have witnessed many mortgage lenders wrestling with the concept of a good outcome (too little forbearance vs too much forbearance, and everything inbetween) and it is clear that in today‟s environment that delivering a good outcome cannot be achieved by focusing on the customer‟s mortgage needs alone – a more holistic approach is key.
A classic example is where a customer has unsecured debt problems running alongside their mortgage arrears. Completing an income and expenditure form and setting up an affordable payment arrangement on the mortgage may have previously been deemed „enough‟, but if you have not tried to support the customer with their unsecured problem, have you really delivered a good outcome?
“The customer should be signposted to free money advice” would be a common response to the above, but how do you measure the effectiveness of that signposting? Does the customer actually seek the advice they need? What happens next on that journey?
Working with lenders to help customers Over the last 18 months, Payplan has been working closely with forward-thinking lenders that recognise that simply signposting a customer to free debt advice is not enough and that their customers deserve access to a fully joined up and managed service. By using Payplan‟s secured referral process they can:
•transfer customers straight through to free debt advice at that crucial „moment of truth‟
•exchange key mortgage information to ensure complete clarity for all parties
•receive detailed outcome Management Information on every referral, solving the „debt advice black hole‟ and enabling full performance management Lenders using this service have been able to tangibly demonstrate the value of free debt advice to their customers and also to their bottom line, as the Payplan intervention helps customers to prioritise their mortgage arrangements and resolve unsecured debt problems – a great outcome by any measure. The Financial Conduct Authority in the UK certainly sees the value in free debt advice partnerships, with its February arrears and forbearance thematic review concluding: “Firms that made it easy for customers to obtain early money advice saw better outcomes. One lender had piloted a „hot key‟ system which allowed agents to transfer borrowers directly to a third-party debt advice agency. The advice was independent and free of charge to the borrower. As a result of these referrals, some borrowers prioritised their essential outgoings against non-essential expenditure. The lender experienced up to a 50% increase in payments received, resulting in reduced levels of arrears and improved outcomes for both borrowers and the firm.” Continued over the page

3. HML News
The Institute of Money Advisors also sees the benefits of lenders and advice providers working strategically together. In 2013, it awarded Payplan its Best Partnership award, stating: “It was fully evident that Payplan’s nomination demonstrated all the attributes we would hope to see in the Best Partnership category: innovative thinking, creativity in collaboration, the formation of partnerships through breakthrough techniques, effective use of resources and a willingness to explore non- traditional methods in solving age old problems. The judges were most impressed with the outcomes Payplan generated for homeowners with problematic debt, which is perhaps the most robust test of the success of any new initiative. They are worthy winners.” So as the debate around delivering good customer outcomes continues, now really is the time to take a fresh look at free debt advice - a now key component in any customer- focused collections strategy.
HML attended the 2014 International Corporate Restructuring Summit.
David Kelly and Mel Smith attended the event in Dublin on 17 September, where speakers included Brendan O‟Connor, head of Financial Solutions Group at AIB and Eddie Byrne, director of asset management at Hudson Advisors Ireland.
Tom McAleese, managing director of Alvarez & Marsal Ireland, also spoke at the event. He said that from November, the top three banks in each European Central Bank country will be covered by the Single Supervisroy Mechanism.
Alvarez & Marsal Ireland predict that AIB will pass the stress tests (with results announced at the end of October) in first place, followed by the Bank of Ireland and permanent tsb.
Delegates also heard from Fabrizio Grena, executive director, of European Special Situations Group at Goldman Sachs.
He noted that 30% of asset trading activity in Europe has taken place in Ireland since the economic collapse. However, by Q2 2015, the country will be „cooked‟ when it comes to investor opportunity. Instead, Spain currently represents the best opportunity for those looking to take part in asset trading.
Further commentary from the event will be available in the October edition of Ireland Source.

4. HML Ireland Update
Date reflects what the statistic was during that period, rather than when the statistic was published
* Since revised down to 11.3%
Consumer Price Index (Central Statistics Office)
AUG ‘14
0.4%
JULY ‘14
0.3%
JUNE ‘14
0.4%
European Central Bank (ECB) Base Rate
SEP ‘14
0.05%
AUG ‘14
0.15%
JULY ‘14
0.15%
Unemployment Rate (Central Statistics Office)
AUGUST ‘14
11.2%
JULY ‘14
11.5%*
JUNE ‘14
11.6%
Average National House Prices (Myhome.ie)
Q2 ‘14
Up 1.3% from Q1
€190,216
Q1 ’14
Down 0.7% from Q4
€187,736
Q4 ’13
Down 0.9% from Q3
€189,086
Arrears
(Central Bank of Ireland - CBI)
PDH – total
PDH – 90 days+
BTL – total
BTL – 90 days+
Q2 ’14
126,005
90,343
39.669
31,749
Q1 ’14
132,217
93,106
39,361
31,048
Q4 ’13
136,564
96,474
39,250
30,706
Home Repossessions (CBI)
PDH
BTL
Q2 ‘14
1,110
611
Q1 ‘14
1,116
568
Q4 ‘13
1,014
503

5. Industry Statistics
Consumer Price Index The CPI in August was 0.4% higher than August 2013, down 0.1% on July. Notable upward pressures came from the education (4.5%), alcoholic beverages and tobacco (3.9%) and miscellaneous goods and services (2.9%) sectors. This was partially offset by declines in communications (-4.6%) and food and non- alcoholic beverages (-2.6%). ECB Interest Rate The ECB base rate has been slashed by ten basis points to 0.05% in September, a historic low. Mario Draghi, president of the ECB, said: “Following four quarters of moderate expansion, euro area real GDP remained unchanged in the second quarter of this year compared with the previous quarter. While it partly reflected one-off factors, this outcome was weaker than expected.” Unemployment Rate The unemployment rate stood at 11.2% in August 2014, down from 12.7% in the same month in 2013. There were 380,100 unemployed individuals in August, a monthly fall of 2,900 people. House Prices The national average house price in Ireland stood at €190,216 in Q2 2014, a 1.3% increase on the previous quarter, according to Myhome.ie‟s analysis of asking prices. This is the first positive price growth in almost eight years. Commenting, Angela Keegan, managing director of Myhome.ie, said: "It‟s heartening to see asking prices nationally rise for the first time in eight years. While this is an important landmark on the road to recovery, we are still much closer to the start of that journey then the finish.
“The average mix-adjusted asking price in Dublin is now 34% higher than the national figure. This is on a par with trends seen at the height of the boom when the difference stood at 35%, albeit prices are at a much lower base.”
Arrears
Principal Dwelling Houses (PDH)
The number of PDH mortgage accounts in arrears declined by 4.7% between Q1 2014 and Q2 2014. Out of the total mortgage accounts, 16.5% were in arrears, representing 126,005.
The number of PDH mortgage accounts in over 90 days of arrears also declined during Q2, falling by 3%. These accounts totalled 90,343, 11.8% of all the PDH mortgages in arrears.
However, accounts in arrears of more than 720 days increased by 5% during Q2 and currently account for almost 5% of total PDH mortgage accounts. The outstanding balance of such accounts was just under €8 billion at the end of June.
Buy-to-let (BTL)
The number of BTL mortgage accounts in arrears increased between Q1 and Q2 2014 to 39,669 (27.5% of the total accounts) from 39,361 (27.2% of the total accounts).
Home Repossessions
At the end of Q2 2014, there were 1,110 PDHs and 611 BTLs in lenders‟ possession. Of the PDHs, 299 were taken into possession during the quarter, 89 of which were the result of a court order, while 210 were abandoned or voluntarily surrendered.

6. Top News Stories
Investec has sold Start and Kensington.
Lone Star has purchased Start Mortgages in full. Investec said it decided to sell the £540 million (€692 million) Irish mortgage book in order to simplify its banking model.
Investec wants to reshape its specialist banking business and reduce its legacy non- core operations.
In addition, Investec‟s UK lender Kensington has been sold to Blackstone and TPG Special Situations Partners (TSSP). The deal, reported to be worth £180 million (€229 million), is subject to regulatory approval.
Blackstone and TSSP plan to develop Kensington‟s mortgage lending business and have appointed Ian Henderson as group chief executive. He previously held the role of chief executive of Shawbrook.
35,000 new homes are required in Dublin.
That is according to a new study by the Society of Chartered Surveyors, which noted that this level of housing needs to be built over the next four years in order to meet demand.
Planning approval has, however, only been granted for 26,000 properties. The Dublin City Council area is where demand is highest, at almost 14,000 units, with planning permission currently in place for 1,200.
At the other end of the scale, planning permission has been given for almost 17,000 homes in Fingal County Council, but there is demand for just under 10,000.
The report follows the announcement that the National Asset Management Agency (NAMA) will fund the delivery of 4,500 new homes by the end of 2016 in Dublin.
Brendan McDonagh, chief executive officer of NAMA, made the comments at the National Housing Supply Conference. Other speakers included finance minister Michael Noonan and Marian Finegan, chief economist at Sherry Fitzgerald Group.
Mr McDonagh said NAMA‟s project management would support receivers and debtors in addressing title and legal issues, as well as construction, procurement and disposal.
Ireland‟s GDP has grown 7.7% year-on-year.
Figures for Q2 from exchequer returns also revealed that GNP has climbed by 9%. This is the strongest growth rate recorded since early 2000s.
Minister for finance Michael Noonan said: “The turnaround that we are seeing in the Irish economy is a direct consequence of the policies pursued by this government and the sacrifices made by the Irish people.
“Consolidation of close to 20% of GDP has been introduced along with major structural reforms designed to boost the competitiveness of the Irish economy. The specific measures introduced over the past three years to repair and grow key sectors of our economy have also made a significant contribution.”

7. Top News Stories
House prices have climbed almost 15% in the year to August.
The latest figures from the Central Statistics Office show that residential property prices rose by 2.3% over August, up from the 2% increase in July. In August 2013, residential property prices rose by 0.9%.
In Dublin, residential property values increased by 3.5% over August, marking an increase over the year of 25.1%.
Despite the increase, house prices in Dublin are more than 39% lower than at their peak in early 2007.
Bank of Ireland has sold a pool of mortgages to Dilosk.
The transfer of approximately €223 million- worth of mortgages from the bank to Dilosk took place on 1 September.
Dilosk has also acquired the ICS Building Society brand and distribution platform. Letters have been issued to customers regarding the transfer.
Fergal McGrath, chief executive officer of Dilosk, said: “My colleagues and I would like to welcome our new customers to Dilosk. We look forward to providing them with high-quality service to meet their needs now and into the future.
“I want to thank everyone from all teams for all the effort and attention to detail that went into ensuring such a smooth and efficient transfer process. I would also like to welcome our new colleagues to Dilosk and we wish them every success.”
Dilosk is headquartered in Merrion Square, Dublin and was recently granted Central Bank of Ireland authorisation to operate as a retail credit firm. It is regulated by the Central Bank, and its new customers will be afforded all of the mortgage regulatory code protections.
permanent tsb has seen arrears levels decline by 21%.
The reduction has been seen for mortgage accounts in arrears of more than 90 days and is since the start of 2014. The bank revealed that 25,000 borrowers have been offered restructuring arrangements via its asset management unit (AMU). More than 27,000 Standard Financial Statements have been received from customers between January and the end of August.
The Irish Times reported Shane O‟Sullivan, managing director of the AMU, as saying: “The split mortgage is a key offering and our experience is that home loan customers are very positive about the arrangement.
“We charge 0% interest on the warehoused section of the mortgage and we review a customer‟s circumstances - typically every three years - with a view to ultimately eliminating the warehoused amount.
“Our experience is very clear on this; when customers engage with the bank on their arrears they are receiving practical and workable restructurings which they understand and which they can live with.”