Generation 'locked into battle with the banks'

The mortgage debt crisis has spiralled out of control as a result of Government inaction, and a generation of Irish people are “locked into an endless battle of attrition with the banks”, a leading arrears advocacy group has claimed.

However, a group representing the banking industry dismissed suggestions that the crisis was worsening and welcomed what it described as the “slowing pace of increase” in arrears.

Escalating crises

“The Government, the Central Bank and the bankers have failed those struggling with mortgage debt, directly contributing to the escalating economic, social and personal crises sweeping the country,” said David Hall of the Irish Mortgage Holders’ Organisation.

“The failure to introduce medium- or long-term restructuring for borrowers, and the banks’ inaction to wake up and realise the size of this crisis, has frozen the economic recovery of the country.”

He suggested that a generation of Irish people had been left to battle the banks without State support and said the mortgage crisis had been compounded “by the unresolved unsecured debt arrears”.

He said that on average, each family in difficulty with their mortgage also had four other sources of debt. “In order for those in debt to return to contributing to the economy we need effective, swift, fair and certain resolution of the household debt crisis.”

He said that while the insolvency Bill would provide a formal framework for the resolution of debts, it was “fundamentally flawed” because it gave banks a veto over any deal. “The banks’ actions over the last five years would give rise to major concern as to their co-operation with the Insolvency Bill,” he warned.

Situation worsening

Mr Hall said the situation was worsening. “It must be internationally unprecedented for a Taoiseach, Tánaiste, the governor of the Central Bank and head of banking regulation all to state their dissatisfaction with how banks are dealing with mortgage-holders, while at the same time not acting to deliver real policy solutions and changes. This Government is now fully paralysed by the crisis.”

The Irish Banking Federation (IBF) took a very different view and said while the overall level of private residential mortgage arrears had increased, the pace of that increase was slowing. It also said the level of repossession in the Republic was “very low by international standards” and said its members were “focused on maximising the number of sustainable mortgages”.

“Given the ongoing economic and financial backdrop, it is not surprising that the overall stock of mortgage arrears continues to grow and is likely to continue that way for some months yet,” said IBF director of public affairs Felix O’Regan.

‘Sticking-plaster strategies’

Chief executive of the Irish Brokers’ Association Ciarán Phelan accused the banks of failing to get to grips with the issue. “Our banks are the new leaders in the development of sticking-plaster strategies.