By Charlie Weston
THERE can be little doubt that we are now in the midst of a mortgage meltdown. Yesterday’s figures from the Central Statistics Office show that 77,500 households are in arrears on their mortgages and rent payments.
Previous estimates from the Economic and Social Research Institute (ESRI) and housing charity Respond had put the numbers in arrears on their mortgages at 35,000. And the situation for cash-strapped households is likely to have become more difficult this year, as the CSO study was carried out last year. More people are signing on the dole this year.
Among the fears inflicted on individuals and families by the financial crisis, one of the most nightmarish is the fear of losing one’s home.
It is clear that the fear is becoming real for people. Some figures starkly illustrate the risk to family homes:
Around 1,000 people a month are applying for state support to pay the interest on their mortgages. However, between a half and a third of these people are turned down every month for mortgage interest supplement. Just 400 new households a month are succeeding in getting mortgage interest supplements.
The courts are seeing an average of 100 repossession orders a month. But few of these cases end in repossession orders being granted.
The state-supported Money, Advice and Budgeting Service (MABS) said a huge proportion of its clients were having difficulty paying their mortgages. Some 69pc of people who seek help from MABS are either in a job, have only recently lost their job, or are self-employed.
Personal debt in Ireland is estimated at over €168bn — more than double the level of the national debt of €75bn. Mortgage debt alone is around €145bn, which is 2.7 times the €54bn in bonds to be issued by the National Asset Management Agency (NAMA).
Some 20pc of families are in arrears on all sorts of loans.
All this means that thousands of families are trapped in a vicious cycle of debt.
Up to the middle of last year, people with large mortgages, multiple credit card balances and overdrafts were relying on consolidating all this debt into a new mortgage to tide them over. But that safety valve is no longer available. It is often problems repaying short-term debts like credit cards, expensive store cards, credit union borrowings and moneylender loans that spark financial woes.
And it is not just the unemployed who find themselves in a financial mess. According to debt advisers, up to half of those with chronic debt problems have not actually lost their jobs or had a major drop in income.
This points to the need for a more concerted response from the banks and the State to stop people losing their homes.