Paul Connaughton (Galway East, Fine Gael)

The latest figures from the Central Bank of Ireland for mortgage interest arrears make for very pessimistic reading. Circumstances are deteriorating fast and the problem is so vast that it cannot be ignored. I fully understand the concept of moral hazard and the fact that people who did not speculate in the mortgage market do not deserve to be penalised for the debts of others. However, the problem has reached proportions that simply cannot be ignored any more.

The real crux of the crisis is the fact that the current figures are only raising a red flag on the issue. The mortgage interest arrears crisis it is only in its infancy. As many of those in dire financial straits were made redundant since the height of the property boom in 2007, arrears are going to grow exponentially in the coming years. The problem of negative equity is growing. The difficulties will be compounded in 2012 and future years because of the upheaval in international financial markets. It will have a knock-on effect on the availability of credit. Essentially, the days of cheap credit and easy access to credit are gone, not only in Ireland but also across Europe. This will ensure the property market remains in the doldrums and those in negative equity who are willing to trade down will be hampered because willing buyers will not be able to obtain credit. The latter would be unlikely to buy in a market in which prices continued to plummet. This is the perfect storm in financial terms, with international and national economic factors combining in an excruciating way for householders.

There is a danger that debates such as this will descend into a veritable feast of euphemisms, with talk of negative equity, debt ratios, debt solutions and distressed mortgages. It is not distressed mortgages that should be the subject of our focus but the distressed mortgage holder. I refer to the person who has sleepless nights worrying about the security of the family home. I refer also to children growing up in homes filled with tension because mortgage arrears are piling up. In such circumstances, any small instance of over-expenditure or unanticipated cost makes the family budget teeter on the brink or places it in a state of collapse. Thousands upon thousands of households across the country experience considerable angst and tension if there is but one unanticipated bill such as one associated with a visit to an accident and emergency department or car repairs. A high electricity bill also has this effect. I refer not only to the homes of people who depend on social welfare but also to those of people who work daily in low and medium-paid jobs, people whose rates of pay have been cut and people who are working shorter hours or are on a three day week. Such circumstances were never anticipated when they were taking out their mortgages.

Many pensioners are affected. They are struggling to help their adult children through dark financial circumstances. The crisis is taking a considerable physical, emotional, spiritual and financial toll on people across the State. Already, the stress is evidenced by high suicide rates, increased demand on mental health services and the urgent appeal made this week by the good people of the Society of St. Vincent de Paul who are only too well aware of the incomprehensible financial burden placed on many families. The Minister has acknowledged there is no magic solution to this crisis and, in dealing with it, a correct balance must be found between those who cannot pay for their mortgages because of income shocks and those who will not pay. Only 10% to 13% of those in negative equity are also in arrears, which indicates that the problem is caused by income shocks rather than negative equity.

I commend the Minister on the steps he has already taken in regard to forcing banks to deal with people who are facing up to their difficulties, the Taoiseach on his intervention to get the banks to pass on the reductions in interest rates, and the Minister for Justice and Equality on his efforts to update our antiquated bankruptcy laws. I welcome the Keane report and the many good suggestions that have arisen from this debate. I hope the relevant Ministers take account of these suggestions.

If we are to deal with this problem, we will have to consider the consequences of letting the current situation deteriorate, which is inevitable if we do not change course. We cannot stand by and watch as these people crumble under a mountain of debt because the social toll will be too high. Some will ask whether we can afford to address the problem given that the country is effectively bankrupt. I argue that we cannot afford to do otherwise.

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