Recent Central Bank figures on mortgage arrears reveal an enormous crisis brewing. With all of the focus on the hundreds of austerity measures this government are implementing, the relentless rise in mortgage arrears numbers has, so far, not gotten the attention it deserves.
One reason for this may be the High Court judgement that acted as a bar on quick repossessions and evictions for those in arrears. This bar has now been removed with the passage this year of the Land and Conveyancing Act 2013 which decisively shifts the balance of power towards mortgage lenders.
The figures for arrears to the end of June 2013 are stark: 142,892 mortgages in arrears, out of a total of 770,610 mortgages. 97,874 of these are in arrears of over 90 days and 28,860 are in arrears of two years. In addition to those in arrears a further 42,309 mortgages have had to be restructured to allow them to be more easily paid. Behind these blunt statistics are hundreds of thousands of ordinary people who face a very uncertain future. When the Central Bank began systematically collecting data on mortgage arrears in September 2009, 3.3 per cent of mortgages were in arrears of 90 days or more. As they collected statistics for each quarter since then this has grown every single quarter so that it quadrupled to 12.7 per cent by June of this year.
This raises the question of what is to be done to resolve this crisis? Most pro-capitalist commentators have tried to distort the nature of this crisis by attributing the scale of arrears to so-called ‘strategic default’, where homeowners don’t bother to service their mortgages even though they can afford to, in the hope that most of the mortgage will be eventually written off. By constantly using this term, the capitalist media hope to prepare the ground for a wave of repossessions and evictions. Particularly now, where there are signs that house values are once again increasing in Dublin (largely distorted by sales in wealthier parts of south Dublin), the banks and other mortgage lenders see a chance to make a killing on the backs of homeowners in mortgage arrears. To this end the Fine Gael and Labour parties have obliged with legislation to allow banks, bailed out at enormous public expense, to launch a co-coordinated attack.
What do the Socialist Party propose as a solution? The only realistic, feasible and fair way to resolve this crisis in the interests of ordinary working people is for a full write down of all mortgage debt to the current value of homes. The objection will be raised that this would cost an enormous sum and would be impracticable. Even if a write were limited to the current value of arrears only, that would cost €2 billion euro. Or about 3.15% of the €64 billion cost so far of the bank bailouts. A write down of all mortgages to current real value, would be an enormous relief to all mortgage holders and a huge stimulus to the domestic economy.
However, the true nature of capitalism as a system for the ruthless and relentless exploitation of ordinary people, is captured in the Irish mortgage arrears crisis. A system which can toss €64 billion at reckless banks, with ordinary people picking up the tab for generations to come, at the same time refuses to bail out hundreds of thousands of these same ordinary people who stand to lose their homes as result of vicious austerity policies.
