This time last year, we had the Morgan Kelly article at the start of August warning about the mortgage crisis, we had what seemed like a knee-jerk reaction with the Government rustling up from nowhere the Keane research which led to the Keane report published in October after President Bill Clinton identified the mortgage crisis as the number one economic problem facing the country. And remember MP Mac Domhnaill, the man from Kerry whose heartbreaking letter to the Irish Times aroused widespread sympathy and alarm?
A year later and the mortgage crisis has intensified; figures released last week show the number of mortgage accounts in arrears has increased by 50% in the past year, that more than 83,000 owner-occupier mortgage accounts are now in arrears of more than 90 days, and when taking into account all arrears including those less than 90 days and the number of restructured mortgages, some of which might be repaying zero at present, then 22% of mortgages are in trouble.
There has been a slight relenting in the pace of increase in the last two quarters, but the numbers are getting worse. And responding that 78% of mortgage accounts are being repaid on time isn’t much more helpful than saying that with only 11 homicides in Q3,2011 in Ireland, the vast majority of the 4.6m in the State wasn’t murdered, that there were 28 Tiger Kidnap offences but again 4.6m people weren’t kidnapped or that 630 people were sexually assaulted but most weren’t. Every single household in arrears should be a matter for concern.
Figures gratefully received today from the UK’s Council of Mortgage Lenders for the second quarter of 2012 show just how dysfunctional our mortgage crisis has become. In the UK less than 2% of mortgage accounts are in arrears for more than 90 days, in Ireland the latest figures show 10.9%. Despite having a healthier economy, lower unemployment with property prices down just 10% from peak, you are 23 times more likely to have your home repossessed in the UK if you run into difficulty.
Whilst accepting that the UK is a different jurisdiction with a different economy, history and culture, it is our closest neighbour both geographically and arguably, socially; so when there are big differences – be that in unemployment benefit rates or the cost of health or broadband – then questions suggest themselves. Ultimately there may be justifiable reasons for disparity, but when there are such stark differences, it seems sensible to at least ask why.
It may seem heartless to call for more repossessions in Ireland, but by sticking our heads in the sand, we are consenting to perpetual social harm and economic blight. Of course keeping the family home should be a social and economic priority, but we need to debate if it is better to put a merciful end to hopeless cases and provide social housing or rent assistance. And if we had a proper personal insolvency regime, then we might find banks willing to do deals in cases which might otherwise be hopeless. Otherwise we continue to have large numbers of households frozen in fear for the future with all the distress that causes, plus the economic harm of households not spending in anticipation of imminent distress – bad for the economy and even worse for society.