Mortgage debt like ‘an anvil hanging over my head, just waiting to drop’

A single parent of two sons, Claire* will be 57 on her next birthday. She fell into mortgage arrears after the collapse of her marriage a decade ago.

Claire and one of her children suffer from chronic medical conditions. She now owes the bank €400,000 in total.

“It’s like an anvil hanging over my head, just waiting for it to drop constantly,” she says. “It’s very difficult to sleep at night. It crowds your brain . . . I wonder what this constant state of fight or flight is doing to my health.”

Claire is one of more than 22,000 people aged 50 and over, who have fallen behind on mortgage payments. Data from the Central Bank, released to Labour Party finance spokeswoman Joan Burton, shows for the first time the number of people approaching, or already at retirement age, who are failing to deal with significant mortgage debt.

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The data do not show how many of these accounts are secured on family homes, versus debt owed on investment property. For a buy-to-let investment, things may be simpler – to a point.

Large chunk of debt

Selling can clear a large chunk of debt, although there may be a shortfall if the property is still in negative equity. Owners may also lose rental income, which is a vital component of their post-retirement income.

The problem is more difficult for those who, like Claire, are facing serious arrears on their family home mortgage.

Ms Burton says it would be a “social disaster” if lenders were to repossess homes of older people who fall behind on their payment.

“Becoming a social housing tenant in sheltered accommodation for many people is not an option, because that accommodation has not been built by local authorities in any significant numbers,” she says.

The Government should devise “a structure whereby people in this situation can address the difficulties they have, but not in a way that leaves them homeless,” she says.

Significant debt into retirement

While the issue is at its most acute for those in arrears, advocacy groups say many who are up to date on their payments may carry significant debt into retirement. They may then struggle to clear debts and maintain their standard of living. The data show there are more than 34,000 mortgages held by people aged 60 or above who still owe at least €100,000 to the bank.

“An increasing number of older people are experiencing fear about retirement due to worries about income adequacy,” a spokeswoman for Age Action Ireland said.

“Our economy has been built on the backs of those already in, and approaching, older age. These are the same women and men who lived through the marriage bar, shouldered several recessions and are now dealing with the accumulated disadvantages. Successive government policies have failed to adequately plan and provide for an ageing population which will ultimately impact on all of us throughout our lives.”

*(not her real name)