After a 2-week visit to Ireland last month, the IMF released a report yesterday commending the measures the Irish Government took to deal with its financial crisis. The report also endorsed plans to help struggling homeowners burdened with mortgage difficulties as a result of the financial crisis by putting in place “narrowly-targeted support measures for vulnerable homeowners”.
Most recent figures show that 1 in every 25 or some 32,000 residential mortgage holders in the state have not paid their mortgage for three months or more. Under the new recommendations (which are to be made next week) lenders will have to collaborate with hard pressed mortgage holders and offer them one or a combination of the following;
- extend the term or length of the mortgage
- let them pay interest only on their mortgage
- allow them to take a payments holiday
However Financial regulator Matthew Elderfield expressed concern last month saying that any such support or alternatively payment options could carry the risk of “moral hazard”, whereby it could incentivise homeowners to breach their financial obligations. “In seeking to assist households in difficulty, we need to recognise that the cost of any support will be borne by those neighbours who avoided excessive borrowing themselves or are gritting their teeth and meeting their obligations” he added.
Have your say:
- Should support be provided for those with mortgage arrears?
- If so; where do we draw the line on financial support? What about the burden that would be caused on those who would have to provide the support?