Moody's Warns of Further Irish Mortgage Losses

DUBLIN (Reuters) - Ratings agency Moody's on Thursday downgraded billions of euros worth of Irish residential mortgage backed-securities, citing the country's weak economy and risks associated with its banks. 

Analysts have warned that an increasing number of mortgage defaults could lead to a new wave of losses at Irish banks, several of which collapsed under the weight of bad property development loans.
Moody's said in a statement that it had downgraded the ratings of 50 tranches in 17 prime Irish residential mortgage-backed securities. It said 31.4 billion euros (27 billion pounds) worth of securities had been affected by the review.

Sixteen of the tranches have been downgraded to below investment grade, it said.
It said it expected further deterioration in the performance of Irish pools of residential mortgage loans in the coming months, citing increased levels of negative equity as house prices continue to fall and a lack of credit for refinancing.

"Moody's anticipates further deterioration in the performance of Irish pools of residential mortgage loans," the statement said.
"Lenders will continue to avoid recognizing these losses by offering more loan modifications going forward, reflecting lenders' and regulator's limited appetite to enforce on highly delinquent loans," the statement said.

The proportion of Irish home loans in arrears for more than 90 days rose to 5.7 percent at the end of last year compared with 5.1 percent at the end of September, the central bank said last week.
The bank last year told lenders to wait a year before applying for repossession orders and not to impose extra charges or interest on customers who are cooperating with their banks to deal with their financial difficulties.
Moody's said it had increased its maximum assumed losses on the loans reviewed to 13 percent from 8 percent, but said many of the loans were of below-average quality for the Irish mortgage market.