I don’t drink, I don’t smoke; every penny I had was going on the mortgage. I was finding it really hard just to get food on the table.”
ALMOST SEVEN YEARS after the banking crisis exploded with full force, tens of thousands of Irish borrowers are left with the prospect of losing their family homes still hanging over their heads.
For the majority of homeowners without equity to fall back on, there are only two, long-term options: strike a deal with their banks or declare bankruptcy and hand over the keys.
The number of borrowers in arrears has been edging down, to 84,717 in February for those who borrowed on their own homes – or about 12% of all mortgages. The number already restructured stood at 106,402.
But over one-third of the accounts in arrears with the six main banks were behind two years or more on their repayments – and that figure has been rising.
Meanwhile, figures from the Insolvency Service of Ireland show the number of bankruptcies has also been increasing. For most, that process ends in losing the family home.
This week, as policymakers debate how best to deal with the crisis, TheJournal.ie spoke to one homeowner about their experience of being buried in mortgage debt.
Seán’s story
In many ways, Seán* and his wife were lucky. They bought their home, a three-bedroom terrace in Co Kildare, in the early 2000s – well before the peak of the boom.
With a mortgage of under €150,000 and money rolling in from two full-time jobs, the couple felt comfortable borrowing more – about €80,000 over several years – to renovate the older property.
In good times, we were pulling in good money and we never had problems with paying the mortgage; I never missed a payment – I was very adamant about that,” he said.
However cracks started appearing in the family finances about four years ago after the wages from his white-collar job were cut and his wife’s shifts were reduced from five to three days a week.
While periodical shifts on and off interest-only payments postponed any emergency, the “crunch” came a little over two years go when he lost his job altogether – then his wife lost hers within the space of three weeks.
Things were really, really bad – probably the worst time we have had. We were lost – I had been working since I was a boy, we never knew what it was like to be unemployed.”
At that stage the older of the couple’s two children was a toddler, while the second was still a baby.
“Obviously the mortgage was creeping up and creeping up – I was very depressed about it,” he said.
At one stage I remember waking up and walking around the house at four o’clock in the morning, and just standing and watching my children while they were sleeping. I was heartbroken; I couldn’t make the mortgage payments and I thought I was going to lose my house.”
Seán said he continued to make payments – even if he wasn’t able to meet the full amount – but by that time his bank had effectively stopped engaging with him.
I don’t drink, I don’t smoke; every penny I had was going on the mortgage. I was finding it really hard just to get food on the table.”
The crisis came to a head in September when he met with bank officials in Dublin. After they heard he had found work again in sales, the attitude became “pay or else”, he said.
It was like someone had a gun to my head. I was crying on the steps of the bank. I wanted to try and keep my home, my home is my castle. There were no negotiations, whatsoever.”
It was then that Seán, now in his early 40s, contacted the Irish Mortgage Holders Association, one of several not-for-profit groups set up during the recession to help those struggling with debt, who worked to broker a split mortgage for him with his lender.
Half the debt was “warehoused”, which meant he paid no interest on that part of the loan until the family’s circumstances changed.
It was like a ton of bricks being lifted off my back; it gives you time in your house and time to help you deal with the problem. It means you’re not homeless.”
‘Shameful’
The father-of-two, who asked not to be identified in this article because it was “shameful” admitting you couldn’t pay your bills, had this response for anyone who believed those who borrowed more than they could now afford during the Celtic Tiger period shouldn’t be entitled to debt relief:
They don’t know what it’s like to put all of your eggs in one basket, working 50 or 60 hours a week just to pay for your house. The banks were throwing the money at you, saying spend it, spend it.
I didn’t buy the house to make money, I bought it for somewhere to live. I put my sweat and blood into the house. At one stage I would say I wasn’t far from suicide, if it wasn’t for my children.”
*Name has been changed
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