The problem of mortgage interest arrears is growing so fast that it will become a major problem over the next few years and steps must be taken to tackle it before it gets worse.
This is the view of Fine Gael Galway East TD Paul Connaughton, who was speaking in the Dáil on Tuesday during a debate on the issue.
He is calling on the Government to focus solutions on distressed mortgage holders.
“It is not the distressed mortgages that should be the subject of our focus, but rather the distressed mortgage holder,” he said, “the person who has sleepless nights worrying about the security of the family home.”
According to Dep Connaughton, the latest figures from the Central Bank of Ireland on mortgage interest arrears show the situation is “deteriorating fast and is a problem so vast it cannot be ignored”. He also warned that the problem is “only in its infancy”.
“Many of those in dire financial straits were made redundant since the apex of the property boom in 2007,” he said. “Arrears are going to grow exponentially in coming years and the problem of negative equity is growing.”
He said the difficulties will be compounded next year and beyond because of the upheaval in international financial markets, which will have a knock-on effect on the availability of cheap and easy access to credit.
“This will ensure the property market remains in the doldrums,” he said. “Those in negative equity willing to trade down will be hampered because willing buyers cannot get credit and are unlikely to buy in a market where prices continue to plummet.”
Dep Connaughton acknowledged that there is “no magic solution to this crisis” but he said any measures used to tackle the issue have to strike a “correct balance between those who can’t pay for their mortgages because of an income shock and those who won’t pay their mortgage”.
He pointed out that only 10-13 per cent of those in negative equity are also in arrears. “Thus, it is the income shock already delivered that has caused the problem and not the fact of negative equity,” he said.
Dep Connaughton also added that in dealing with the problem, the consequences of letting the current situation worsen must also be looked at.
“We cannot stand by and watch as these people crumble under the pressure of a mountain of debt,” he said. “The social toll of such a consequence is simply too high. Some will ask can we afford to address this situation given that the country is effectively bankrupt, I would ask can we afford not to?”
