It will be Friday this week when our own Financial Regulator, Matthew Elderfield publishes the mortgage arrears data for the second quarter of 2012. Sadly on this occasion, the data will again be confined to owner occupier mortgages, but it is hoped that in November 2012, we will start to get data on Buy-to-Let mortgages as well. This is what the historical data looks like:
As usual, the Financial Regulator will provide home repossession data on Friday as well, but it is unlikely that there will be much change to the miniscule number of repossessions that take place in (the Republic of) Ireland. Since 2009, there have been about 500-600 repossessions per year, and there has been little absolute change in the last three years, to quarterly statistics despite the intensifying crisis of unemployment, reductions in take-home pay and collapsing property values.
Contrast this with our neighbours over the Border who on Friday last published repossession data from its courts system for Q2,2012. The figures show that between April and June 2012, there were 713 repossession orders granted by the Northern Ireland courts, of which 205 were suspended and 6 were “suspended possession combined”
Northern Ireland is a jurisdiction with a 7.6% unemployment rate compared with 14.8% on this side of the Border. Their residential property has declined by about 50% since the peak in 2007, about the same collapse as our own, though with higher inflation across the UK than in Ireland, the real collapse in Northern Ireland has been slightly worse than our own. And remember in Northern Ireland, they don’t have a problem with vacant housing that we do here (see bottom of table below).
So on a pro-rata house basis – and taking account of immediate possession orders only – the repossession rate in Northern Ireland is 8 times greater than in the Republic. Taking account of all repossession orders, actual and suspended, the repossession rate is 11 times that of the Republic. These comparative results are based on total number of dwellings in both jurisdictions – we don’t have mortgage statistics for Northern Ireland, in the Republic there are about 764,000 mortgages.
An unpleasant but inevitable consequence of adopting a UK model for personal insolvency would be an increase in repossessions, and in this country we have a troubled history with eviction and dispossession under occupation. But as a society and economy, we need to ask ourselves if it is better to leave people in property which they cannot afford but under austere conditions which blight their lives and their contribution to the economy or to release them to get on with their lives in a humane way but which may mean the repossession of their home. Supporters of a UK-style insolvency/bankruptcy model will need confront these unpleasant consequences.