November 2014

The Financial Conduct Authority has approved the purchase

of HML by Computershare

A central credit database may not be operational in Ireland

until 2016

Ireland is expected to experience the fastest growth in the EU

in 2014

HML News

The Financial Conduct

Authority has approved the

purchase of HML by global

financial services company

Computershare.

HML has been purchased by Computershare

in order to extend its mortgage servicing

business into the UK. Computershare plans to

invest in the mortgage servicer, grow it and

provide the scale and capital to allow it to take

advantage of developing opportunities.

Computershare provides financial and

governance services across 22 countries on

five continents and employs more than 15,000

people worldwide, with an annual global

turnover of approximately US$2 billion (£1.2

billion), and already owns a mortgage

servicing business in the USA. In the UK,

Computershare is based in Bristol, Edinburgh,

Halifax, London and Jersey; and will retain

HML’s office locations.

Andrew Jones, chief executive

officer of HML, said: “Computershare

becoming our parent company is excellent

news for the business and those who work at

HML, as well as our clients and their

customers.

“Computershare is committed to investing in

and growing HML, allowing us to continue to be

the leading third-party mortgage administration

company in the UK and Ireland. With the desire

to grow the business and develop the specialist

expertise that HML has, it’s clear to me that

culturally we are much aligned with

Computershare.

“HML has had 25 years of successfully

delivering value to clients, customers and our

people and this deal will secure the future of the

company for many more years to come.”

Naz Sarkar, regional chief executive

officer of Computershare, said: “We’re

pleased to welcome HML to the Computershare

group and I’m delighted that Andrew and his

senior team will be remaining with the business.

Several experienced Computershare staff will

be relocating to Skipton to supplement the HML

team and assist with the transition to

Computershare. Together, we’re excited at the

opportunities that lie ahead.”

HML News

HML has won two MFG

Awards.

The company took home the Customer

Service/Treating Customers Fairly Award in

the Mortgage Servicing Companies category and

the Best Debt and Arrears Strategy Award.

HML also achieved Highly Commended in both

the Innovation (Non-Lenders) and Best Use of

Technology (Non-Lenders) categories.

The two award wins follows last year’s success,

where the financial outsourcer won three MFG

Awards in the Best Use of Technology, Innovation

and Best Debt and Arrears Strategy categories.

HML has won the competitive latter category for

the third year in a row.

Andrew Jones, chief executive officer

of HML, said: “It is fantastic news that HML

has won two awards and has been awarded

Highly Commended in two more categories. The

fact we have been recognised for our customer

service and arrears and debt management is

particularly important, as we continue to be a

market leader for quality within the mortgage

industry.

“Taking home the Best Debt and Arrears Strategy

Award for the third consecutive year is testament

to our focus on appropriate outcomes for

customers, which lies at the centre of our clients’

debt and arrears management strategies.”

Best Debt and Arrears Strategy

HML won this award for its two-pronged arrears

management approach for a UK client that

wanted to support those borrowers at risk of

falling into arrears and increase payment on

underpaying accounts.

Each customer’s case was managed in

accordance with their particular circumstances,

with the appropriate support applied.

HML implemented call campaigns targeting those

borrowers who, based on its advanced analytics,

were considered to be most at risk of falling into

arrears in the near term. Early contact is key, as it

gives borrowers more time to assess their

finances and work towards a sustainable solution

with their lender.

Ian Carr, portfolio servicing director at

HML, said: “By enhancing customer

engagement through early contact, customers can

enjoy better financial outcomes and targeted

support. It is fantastic that our arrears

management strategy has once again been

recognised among respected industry peers.”

Customer Service/Treating Customers Fairly

HML won this award for Destination 100%, its

evolutionary journey to a total quality concept in

the third-party mortgage administration sector.

HML wants to set a market-leading quality

benchmark and support the financial services

sector to be preventative against poor customer

outcomes rather than reactionary, which the sector

traditionally is.

Pushing the quality boundaries in the UK and

Ireland’s outsourcing sector reduces the tolerance

for poor customer outcomes, something which is

deemed as good practice by the Financial

Conduct Authority.

Richard Wade, customer service

director at HML, said: “It is testament to the

hard work of everyone at HML that our drive to be

a market leader for quality has been recognised by

such an esteemed publication as Mortgage

Finance Gazette. This stands us in good stead to

further push the market’s quality boundaries in

2015 and beyond.”

HML Ireland Update

Date reflects what the statistic was during that period, rather than when the statistic was published

Consumer Price Index (Central

Statistics Office)

OCT ‘14

0.2%

SEP ‘14

0.3%

AUG ‘14

0.4%

European Central Bank (ECB)

Base Rate

NOV ‘14

0.05%

OCT ‘14

0.05%

SEP ‘14

0.05%

Unemployment Rate (Central

Statistics Office)

OCT ‘14

11%

SEP ‘14

11.1%

AUG ‘14

11.2%

Average National House Prices

(Myhome.ie)

Q3 ‘14

Up 1.4% from Q2

€193,000

Q2 ‘14

Up 1.3% from Q1

€190,216

Q1 ’14

Down 0.7% from Q4

€187,736

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

Industry Statistics

Consumer Price Index

The CPI in October was 0.2% higher than the

same month in 2013, down 0.1% on

September. Notable upward pressures came

from the education (4.8%), alcoholic

beverages and tobacco (3.9%) and

miscellaneous goods and services (3.5%)

sectors.

This was partially offset by declines in clothing

and footwear (-4.9%) and food and non-

alcoholic beverages (-2.7%).

ECB Interest Rate

The ECB base rate remained at 0.05% in

November. Mario Draghi, president of

the ECB, said: “The risks surrounding the

economic outlook for the euro area continue to

be on the downside. In particular, the

weakening in the euro area’s growth

momentum, alongside heightened geopolitical

risks, could dampen confidence and, in

particular, private investment.“

Unemployment Rate

The unemployment rate stood at 11% in

October 2014, down from 12.4% in the same

month in 2013. There were 358,630

unemployed individuals in September, an

annual fall of almost 38,000 people.

House Prices

The national average house price in Ireland

stood at €193,000 in Q3 2014, a 1.4%

increase on the previous quarter, according to

Myhome.ie’s analysis of asking prices.

On an annual basis, the asking price rose by

1.1%, which is the first positive year-on-year

growth in seven years.

Commenting, Angela Keegan,

managing director of Myhome.ie,

said: “It's been well flagged that Capital Gains

Tax is coming to an end and that is a measure

we would welcome.”

According to the Central Statistics Office,

national residential property prices climbed by

16.3% in the year to October. This is up from

the 15% rise in September.

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.

Top News Stories

The 20% mortgage deposit

rules may be eased.

Governor of the Central Bank of Ireland (CBI)

Patrick Honohan hinted at the move when

speaking at the Money Advice and Budgeting

Service’s National Management Forum.

He stated that borrowers in Ireland may be

able to obtain a larger mortgage, so long as

they purchase home loan insurance.

“While we point out that too liberal a use of

such insurance can have the effect of

neutralising the effectiveness of a ceiling on

loan-to-value ratios as a mechanism for

preventing house price bubbles (and while it

typically provides no protection to the

borrower), this would be less a concern if

limited, for example, to relatively small loans

and/or first time buyers,” Mr Honohan

explained.

The CBI recently published new mortgage

rules which are due to come into effect on

January 1st.

These included that just a fifth of new

mortgages should be issued above 3.5 times

income, while no more than 15% of new home

loans should have an LTV ratio of more than

80%.

Consumer sentiment has

fallen.

Between September and October, sentiment

fell from 92.8 to 85.5, according to the KBC

Ireland/Economic and Social Research

Institute (ESRI) Consumer Sentiment Index.

The three-month moving average also declined

from 89.8 in September to 88.5 in October.

ESRI’s Ciara Morley commented: “Since the majority of consumers were

contacted in the early half of the month it is

highly probable that the Budget announcements

announced on the 14th of October have not yet

had the fed through to consumer sentiment this

month.

“All five components of the Consumer

Sentiment Index were weaker in October.

Declines occurred in consumers’ view of the

outlook for their household finances over the

next 12 months, in their view on their financial

situation compared to 12 months ago, and in

their expectations of unemployment over the

coming 12 months. There were also declines in

the recovery expectations of economic

performance over the coming 12 months as well

as weakened perceptions for purchasing

durable consumer goods.”

Ireland is expected to

experience the fastest

growth in the EU in 2014.

Real GDP growth forecast stands at 4.6%,

according to the European Commission’s 2014

Autumn Economic Forecast.

The EU figure is 1.3%, while the euro area is

expected to see real GDP growth of 0.8%.

Ireland is forecast to have 3.6% output growth

in 2015 and 3.7% in 2016.

“Ireland is decoupling from the euro area, as its

recovery broadens and gathers firm momentum.

This robust and faster-than-expected expansion

should bolster government revenues and

facilitate a reduction of the deficit,” the full

economic forecast stated.

Top News Stories

The Strategic Banking

Corporation of Ireland

(SBCI) has launched. Initial funding of €800 million has been

released to the SBCI, which is state owned

and will provide tailored loans to small and

medium-sized enterprises (SMEs).

The first loans are expected to be made

available at the end of 2014.

It has been designed to pass on reduced

lending costs to SMEs through access to

lower-cost funding and to increase competition

within the market.

Michael Noonan, minister for

finance, said: “We have big plans for the

SBCI and it will be a key source of funding to

SMEs for years to come. The legislation which

established the SBCI allows for up to €5 billion

to be made available to SMEs over the next

five years. Existing institutions will be used as

on lenders of the SBCI funds. This new source

of competitive and innovative funding will

support SME’s to grow and invest and create

jobs”.

Credit unions could face

tighter regulation. The CBI has proposed new rules, including

relating to liquidity, lending, reserves and

controls. One proposed change is that the

maximum amount an individual can save with

a credit union may be halved to €100,000.

Another proposal is that credit unions would

only be able to borrow up to a quarter of

aggregate savings, which is again half the

current proportion.

Anne-Marie McKiernan, registrar of

credit unions, said: “These regulations will

foster a safer stronger credit union sector

through an enhanced regulatory framework.

The regulations reflect existing requirements,

some of which have been amended, and also

propose a number of additional requirements.”

The CBI also reiterated in the consultation

paper that the Fitness and Probity regime will

apply to all credit unions from 1st August 2015. It

is being introduced on a phased basis, after

coming into effect on 1st August 2013 for those

unions with assets over €10 million.

A Central Credit Register

could be two years away.

Finance minister Michael Noonan told Fianna

Fail finance spokesman Michael McGrath that

lenders will supply the information for the

register during late 2015 and into 2016,

meaning it may not be fully operational until

2017.

Ireland currently does not have a centralised

register which lenders can use to make

informed decisions, something which Mr

McGrath has criticised.

He said: “It was clear that the lack of centralised

source of credit data was a significant factor in

disastrous lending decisions by Ireland’s banks

and financial institutions in respect of individuals

and companies.

“The system of privately operated credit

registers and the lack of obligation on financial

institutions to cross check outstanding financial

commitments fuelled the credit bubble.”

He added that with credit, including mortgage,

demand expected to increase, a register not in

effect until 2016 could once again lead to poor

lending decisions.