Honohan on Primetime

Irish Central Bank governor Patrick Honohan was on RTE Primetime tonight, and I was particularly interested in the final part of his interview. In relation to mortgages, emphasis mine:

RC: We dont need to fight them of because no firesales.

RC: The number of people who are now defaulting on their mortgages..the people who are in serious trouble…

PH: They are in arrears…

RC: …in arrears…but some defaulting and with the possibility of an interest rates rise, real interest rates rise later in the year, possible more people will be pushed into that. Isn’t it possible that the mortgage book of these banks is in far more serious trouble than we’ve thought heretofore, and that the hole therefore is much bigger?

PH: Of course the biggest part of the banks’ books that were not taken into NAMA is the mortgage book. SO from that point of view the mortgage book is the subject of specific scrutiny in our country. We are tracking the increases in arrears were tracking the increases in renegotiations, renegotiation and rescheduling of loans where people are in difficulty is part of the bread and butter of the banks. There is an increase in the potential losses as time goes on, we’ve been tracking that. There are also of course the important human problems, family problems that need to talked about when you’re not talking about billions, you’re talking about hundreds of thousands.

So perhaps a hint at what might happen to mortgages? But just how big will the losses be? Probably – huge.