Catherine Murphy (Kildare North, Independent) | Oireachtas source

A paper written by Ross Maguire of New Beginning best captures what I want to say on this issue. It states:

Family is important for it is the bedrock upon which society is built. The family home is the physical aspect of family... The home is recognition that we are not just economic entities measured on some stock exchange... Those young families who purchased properties between 2003 and 2008 bear the brunt of the economic collapse.

The document refers to "working parents whose principal desire is to pay their way and raise their families". I have come across many such cases. The paper says "we have a simple choice to make" regarding whether we are "on the side of the family" or "on the side of international finance". New Beginning's argument is that "whichever way we look at this, it must mean debt write-down", at least for some of those who are in this terrible trap. It continues:

The banks will demand as much as possible. The grim reality is that the banks will now be devoted to debt collection and teams of people will be incentivised to recover as much as possible [even] when the victims are so vulnerable .... At New Beginning we believe that a sustainable mortgage is based upon a payment constituting about one-third of a borrower's post-tax income. Thus, if a borrower has a post-tax income of €3,000 per month, [it is sustainable to] pay €1,000 per month towards their mortgage. Paying more has two negative effects: firstly it deprives the borrower of funds needed to live and prosper and secondly [and just as importantly] it deprives the economy of families' spending power.

I believe the proposed threshold of approximately 35% is a necessity, although obviously people earning very large amounts of money can afford to pay more. New Beginning refers to the "real case of a young Dublin couple with three children". It explains:

They own a house worth €250,000 and have a debt of €450,000. Their income has been severely reduced. The man lost his job and is now doing freelance work. Based on 35 per cent of their net disposable income they [can sustain a spilt] mortgage of €300,000 – which is €50,000 more than the house is worth.

They put that scenario to Bank of Ireland, but according to New Beginning its "best proposal is that the term of the mortgage be increased by nine years to 29 years; the borrowers will pay over 45 per cent of their net income", with the matter to be reviewed after six months. That is not a solution for that kind of situation. As the document states:

There will be no incentive for this family to improve their lot because any improvement goes to the bank and no matter how much they pay they will never pay off this loan. The family will not spend and they will be deprived. The lack of spending will deprive the economy.

There is a lose-lose in this situation. We should be listening to people who are at the coal face as they try to deal with this issue. The New Beginning document from which I have quoted makes some very good points about the results the current approach will have for families and for society.

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