Rising Mortgage Debt: Are there any solutions?

Rising Mortgage Debt: Are there any solutions?

Rising Mortgage DebtWith a suggestion of a mortgage strike publicised last week, this week Fianna Fail put forward a number of radical proposals to help ease pressure on mortgage owners facing serious arrears. These included;

  • The option of extending a mortgage by as much as 20 years
  • Clamping down on debt management agencies and setting up a debt enforcement agency
  • And making changes to the mortgage interest supplement scheme, which costs nearly €80 million a year

Figures from the CSO show that by last March, 90,000 loans totaling €15.4 billion were dangerously in arrears or had been modified. These numbers include 64,000 modified loans mostly re-set on interest only terms. Of these nearly 26,000 are non-performing after modification. The “at risk of repossession” group is close to 50,000 loans of which 35,000 are in arrears for over 180 days. Homeowners in this category owe €9.5bn on properties that have halved in value.

With the new universal social charge, increased taxation and more interest rate hikes imminent, it’s highly likely that even more homeowners will dip into the arrears bracket before this year is out.

Have your say:

  • What needs to be done to help those in Mortgage arrears / debt? Are there any solutions?
  • Are the proposals, put forward by Fianna Fail, realistic? Would they have an impact?
There are 19 comments for this article
  1. Philip Thompson at 10:57 am

    A way has to be made for people in negative equity to be able to sell their property and buy something more affordable, transferring the negative equity to their new property. Where purchasing again isn’t an option the bank should get the full proceeds of the sale and the remainder of the loan should be written off. I’ve heard this is the case in some other countries. If this had been the case during the tiger years surely the banks would have been a bit more responsible with their lending.

  2. Margaret at 9:53 am

    Lock in the rate for 15, 20 or 25 years. Therefore, the mortgage payment will never go up and people can adjust accordingly. It worked for me when i lived in the states.

  3. laura at 7:02 am

    Peter L , I absolutely agree with you. Very well said. Thanks for posting.

  4. alison at 8:30 pm

    The people who are against help for struggling mortgage holders should also remember that some of theses people paid huge amounts of stamp duty for their property,mine alone would pay two social welfare benefits for two people for a whole year,and this was built into the mortgage ,so the people who are in the smug position of making loose comments should take a step back and remember Iceland the US and other countries were unanimous in helping their people in this position not rearing that dreaded Green eyed monster syndrome.

  5. MARIE at 8:08 pm

    i agree with Colm and Liza; there seems to be anger towards people who are strugling and an attitude of “why should we help them?” well I think we as Irish citizens should support each other and practice a bit more christian charity and national solidarity. i grew up in england and even now the english are much better at pulling together and being loyal to their country albeit not as intensely as in the past.we need to stop begrudging and start recognising that misfortune suffered by any of us will eventually have an impact on all of us and drag the whole nation into poverty.
    finally i think we should get out of the Euro NOW and tell the EU and IMF where to shove it!this country is, according to a professor of ecology ( or related subjects), windy enough to not only fulfill all Irelands energy needs, but to export wind energy as well.now that would give Ireland POWER! the government should default on the loan and spend taxpayers money on wind energy instead!

  6. Nell Leinnon at 7:16 pm

    Biffo, Bertie and Brooks have derived me of my livelihood. Until this trio is brought to justice there is no hope of redemption. Formally, every house and apartment in Eire has an integral resale value of €0. Critically, the top echelons have actually increased their wealth in these straightened times. That is capitalism in its ugliest manifestation.

  7. Daniel Cregg at 4:16 pm

    I am a ‘renter’ and do not know much about the Mortgage area, however I would like to see more ‘Rent to Own’ options available to people. This might be put forward as an additional solution for new buyers and renters.

    Daniel

  8. Jess at 3:24 pm

    I think people should take responsibility for their decisions and only be allowed to extend the mortgage terms or lose their house. I bought in 2009 and have a house that would be worth less than I paid for it, had we not developed the property. We did not go for a fancy big house because we wanted a house we could afford even if one of us lost our job. Life is all about choices. People who are greedy (I.e. Buy a house beyond there means) should pay the consequences. If we bail everyone out, what is to stop people living beyond their means in the future? Effectively what we would be saying is don’t worry about debt because you never have to pay it back!

  9. william fowler at 3:21 pm

    I would comment that when people were buying their homes at the height of the Celtic Tiger they were being given 100% loans by the Financial Institutions whether they needed them or not. The Market value of homes were rising each week and people anxious to get on the Property ladder bought their homes at massively inflated prices.

    I would suggest that any person(s) with this dilemna should be allowed to get their house re-valued at today’s market prices and to negotiate with the Banks/Building societies to repay a mortgage based on this revised figure, therefore enabling most people to repay a fairer amount and thus escape the possibility of total default.

  10. Austin Henry at 3:09 pm

    In all walks of life and business it is difficult to propose a solution to a particulr problems, without knowing exactly the extent of that problem. I do not feel that we really know the full extent of our mortgage debt and people’s inability to maintain payments.
    I feel that every existing mortgage should be looked at and catergorised into low, medium or high risk of default. The banks should look at all three catergories as a unit…yes those at high risk need a special solution to their problem,and this could be an extension to their mortgage repayments…. but this could be balanced in some way by others who are willing to pay off their mortgage from their savings , providing the banks make that alternative attractive to them. So really the people who have a good situation can assist people who do not….but there is a carrot for both parties.

  11. Peter L at 3:08 pm

    I absolutely disagree with Colm, Liza and Val. The reason the banks are in trouble is very simple: people who borrowerd money didn’t pay it back. If you borrowed 100 euro fom your best mate to bet on Leinster in the Magners final you still owe your mate 100 euro today. Just because Leinster lost doesn’t mean you only owe him 50 euro.

    Irish people spent long enough talking about how much ‘their house was worth because the one up the road sold for X’. The simple truth is buying a house is like investing in anything, stocks, bonds or even a vintage car. The value can go up or down, if you are willing (and let’s face it more then enough Irish people were ‘willing’) to benefit on the upside then you have to be able to take the loss on the downside. To ask the banks to take a further loss because you spent 5oo grand on a council house in Cabra is a farce. You gambled, you lost. Accept responsibility for your decision. No-one forced you to buy the house. You are an adult who made your own decision. We all have to live with all of our decisions everyday. Why do you think your purchase of a house is different?

  12. john geraghty at 3:06 pm

    yes,

  13. Val at 1:55 pm

    Agree with Colm as long as it doesn’t cost me any more. I’m not prepared to dig banks out of their self dug holes – I choose not to buy at the inflated prices. The banks concerned should loose their lifeline as they were the ones who took the risks. I believe its only scare tactics to ask us to keep them funded while we slowly slide into the quagmire.

  14. whistlingjacksmith at 1:54 pm

    The legal process is adding to the costs and stress of borrowers who are in arrears. Borrowers who are making genuine efforts to pay their loans (on their main private residence) should have their cases heard by an informal panel.
    An agreed payment based on circumstances could be arranged and be subject to twice yearly reviews.
    We cannot have a situation where we have 300,000 vacant properties (according to census figures) and at the same time we are
    evicting home owners – thus creating even more vacant properties.
    The figures should be broken down so we know the default figures for main residence loans. Where the family home has been used as security for other loans – debt consolidation or 2nd home purchase for example, then separate arrangements can be made for recovery of those debts.

  15. Liza at 1:52 pm

    Agree with Colm. Ordinary people have been burdened with the gambling debts of the banks & have received zero support in return. If we (in putting a roof over our heads) are deemed to have been gambling too then let us have the same level of bailout.

    The big issue that seems to have been ignored by most commentators is the failure of euro banks holding Irish bank bonds to write down the value of these in their accounts. We the irish tax payers are being bullied into paying back 10’s of billions if euro to protect these European gamblers.

  16. david at 1:39 pm

    Looks like the only option for a lot of people will be to emigrate and declare bankrupt, either that or default here and look for the tax payer to house them.
    A lot of people seem to be venomous to wards people in negative equity just for buying a home , big train crash coming down the lines

  17. Colm at 1:19 pm

    Across the board revalue every house to their current “valuation” (<50% of the peak) and set the mortgages to that level. The banks and the government are forcing their bond holders to take a "haircut" so the people should be allowed to do the same with the holders of their debt (i.e. the banks).

    As to what this will do to the economy and the euro well Italy and Spain are going to bring the euro down before the end of the year anyway so we might as well get out in front of that and make sure our people are as debt free as possible to help the economy recover quickly. We can use the chaos of the now inevitable euro collapse to reset the whole debt system and start afresh or we can be the good but somewhat dim boy down the back quitely sitting at his desk while the building burns around him because the teacher didn't tell him he could leave in her haste to get out the window and "teacher will be mad if I leave early".

  18. J. Brendan O’Reilly at 1:00 pm

    Recommendations include a moratorium of 3-5 years on non-performing and “at risk” loans. This will give mortgage-holders some time to improve their financial position.
    Extension of loans to 40-60 year terms, thereby reducing repayment amounts considerably.
    Debt-forgiveness on arrears. Arrears are only exacerbating the position of mortgage-holders and making it less likely that they will ever be able to pay down their loans. Each defaulter should have to qualify for loan readjustment by providing financial records to prove that they qualify for assistance.

  19. Paddy tax payer at 12:32 pm

    When house prices were increasing not one property owner wanted to pay CGT and share their winnings with the tax man, so when the prices drop why should the long suffering tax payer subsidise people who bet the farm on properties they can not afford and in every case did not need to buy as they could have rented.
    During the boom years I advised numerous people not to buy as Irish housing was totally overpriced and the bubble would burst within a few years, but in every case they proceeded to buy. Now, I am expected to further subsidise these greedy, gullible, ‘property portfolio’ fools.
    If you borrow money, pay it back!

Leave a Reply