Professor Patrick Honohan:

It is an interesting proposition and the Deputy has written to me about it. I think the concept of strategic defaults is a phony concept. There is a huge variety of circumstances where people are not paying their mortgage fully. There can be all sorts of reasons for it. It can be that they cannot afford to pay all of their debts and they have decided, rightly or wrongly, that they will pay the short-term debt first because they think they will be able to get back on target with the mortgage. That could be very common. One might find that the banks who hold the mortgage are saying that this is terrible as people are paying everything else, but not the bank. However, is that strategic default? That is people managing their affairs as best they can. They might also be prioritising things that it is unrealistic to prioritise. It is certainly true that they might not realise that they have to adjust their living standards. It is complex. I am not prepared to say, "I have looked at this and the number is 25", because I do not know what the concept means.

We have been doing the type of research mentioned by the Deputy. I referred to it in a speech a couple of months ago and I am told we will be publishing some material of that type, but it will not say what the percentage of strategic defaults is. With regard to the payment of debt, will all of the mortgages that are in arrears now be paid in full or substantially in full by the end or will none of them be paid in full? I am sure that many of the mortgages that are not being fully paid now will eventually come back on track and be fully paid. That means there are arrears now which do not reflect the true ultimate situation.