All of the comment yesterday and this morning on the current mortgage arrears situation miss one very important point and that is the significant number of people who are not yet in arrears but who will be in the coming months. The number of people who come to see me who are not yet in arrears is still rising and is of great concern since they are not in any of the arrears figures published yesterday.
Despite what the banks and government want us to believe this problem is getting bigger and nobody is taking it seriously enough to stem the tide. In the Irish times today David Hall of Irish mortgage holds association makes this same point better then I could and has been for some time.
In my recent interview on RTE I spoke of the current environment being different and nothing like what we have seen before. Well it seems to be getting worse through lack of action not because of lack of solutions. In fact since that interview solutions have dried up, banks have been given instructions by the central bank and government NOT to do any deals for debt forgiveness with borrowers. This is the continuation of the government policy of looking after the fat cats and make the people in trouble or most vulnerable pay more.
The upcoming Personal Insolvency Legalisation has been tainted by the fat cat banks and been allowed by the government. So if the banks do not play ball then the legalisation will be another failure for a government which has turned its back on the ordinary people.
It is obvious to everyone that there is a massive household debt problem here which is holding back the people economically and emotionally. This needs to be addressed and quickly. Our leaders should hop on the government jet and head not to Brussels for fancy meetings and dinners but head west to Iceland where they have solved the household debt problem simply and quickly. The Icelandic government nationalised their banks (as we effectively have done) then instructed them to write down all home mortgages to 110% of the property value. This had the effect of releasing the ordinary people from the excesses of massive household debt and in turn helped their economy to become the fastest growing economy in the western world.
Not only that but after having had to let their banks go bust and default on major loans they have successfully returned to the bond markets. The bond traders know how to get their money back when a default happens and that is to lend again! This is something which seems to have passed our government and their advisors by.
The mortgage arrears problems are not going to go away with tinkering around the edges. If the tinkering continues the economic disaster we are experiencing will only get worse! And it looks like that is what is in store for us for a long while!
Paul C Carroll