Mortgage rules could tear families apart, if left unchanged
Issued : Friday 27 March, 2009
Statement by Roisin Shortall TD
Minister of State, Department of Health with responsibility for Primary Care
When I started out in politics, I made a promise to myself that only as a last resort would I tell people that they were better off on the dole. I can no longer keep that promise.
The truth is, in the past six months, I have had to tell many people that they are better off on the dole. And there is one over-riding reason. Mortgages.
The focus of Government and media on the desperate state of our public finances has hidden the grim reality of the devastating debt burden on ordinary Irish families. The boom-bust policies of Fianna Fáil didn't just mess up our public finances; they have left a permanent hefty monthly bill for thousands of Irish homeowners.
There is only one form of welfare support for people struggling with their monthly mortgage payment. It's called Mortgage Interest Supplement. It doesn't pay the mortgage off, nor should it. It pays the interest on the mortgage until such time as the jobseeker returns to employment. The same mortgage and interest repayments remain to be paid once the jobseeker goes back to work.
Most of the rules for this scheme were set down before the housing boom. They reflect a time when mortgages were much lower and were paid back with one wage, not two. So if one of a couple works 30 or more hours a week, they don't qualify - regardless of how high their mortgage is or how low their income may be.
It means that for many families where one partner has lost employment, the other must reduce his or her working hours or give up work altogether. Very often, this is the only way they can continue to meet the cost of their mortgage.
In recent weeks, I have had contact from dozens of newly unemployed people who simply cannot believe that there is so little help for them with their mortgage bill unless their partner is unemployed too. Painters and printers, plasterers and carpenters, builders and electricians - each with high mortgages and young families. And I've had to tell each and every one of them that they are better off on the dole and their wives are too.
Indeed, if the rules are not changed quickly, it is only a matter of time that instead of giving up their jobs, people will be giving up their marriages - just so the family is not made homeless.
There must be a better way.
The Government is the very first to tell those struggling with debt that the worst thing you can do is to ignore the problem; Yet this is exactly what the Government is doing in respect of the mounting crisis of private mortgage debt.
There are at least four areas where the Government could be making a difference.
- Scrap the 30 hour rule that penalises people because they work.
- Revise the means test for the supplement to ensure that it does not act as a disincentive to work.
- Look at ways in which the State could revise the Shared Ownership Scheme to help struggling home-owners to qualify thereby allowing the State to take equity in the home which could be paid back over a more manageable timeframe and at a more manageable rate.
- Get the banks, who have just received €7 Billion in welfare payments themselves, to postpone interest payments for struggling mortgage holders for 2 years.
It is in no-one's interest that family homes are repossessed, families are separated, or workers are forced on to the live register. Yet these will be the consequences if the Government does not act quickly.
