The Unassuming Economist

The IMF report notes:

“House price declines accelerated in the second half of 2011, while mortgage arrears continued to rise (Figure 2). Nonetheless the rate of decline in house prices at 13.2 percent y/y in 2011, remained within the stress scenario for the bank recapitalization, which allowed for a house price decline of 17.4 percent in 2011, and a further fall of 18.8 percent in 2012. With house prices down 47.4 percent from their peak in 2007, indicators of house valuation are returning to historical norms. The value share of owner-occupied residential mortgages in arrears rose to 10.8 percent in Q3 2011. About 10.7 percent of this loan book value has undergone restructuring, mostly reducing payments to interest-only, but about half of the restructured loans are still in arrears.”