Huge rise in level of mortgage debt
Thursday, 13 November 2008
THE local Citizens Advice Bureau covering Ballymoney, Moyle and Coleraine and based in Coleraine has reported a huge increase in families falling behind on mortgage payments.
As the economic downturn worsens, the charity said job losses and rising household costs are stretching budgets to breaking point, leaving families unable to afford monthly repayments.
Worse still, as property values continue to fall many home owners are facing the prospect of negative equity - meaning they could remain in debt even if their house is repossessed.
And while the charity is encouraged by the fact clients are seeking advice sooner rather than later, its message remains the same - ask for help before debt gets out of hand.
Over three days last week Causeway CAB's money advisor saw six clients behind on mortgage repayments when, in the past, she would expect to see just one per month.
“That's six families affected - six people probably losing sleep," Jenni Archer told the Chronicle
“And it's the stories behind those cases - all of those people have families. The worry that goes with debt can be very damaging to relationships, kids are missing out and the stress of the parents is inevitably rubbing off on them."
Bureau manager, Angela Welch believe debt is by no means confined to families on low incomes. "It really has cut across all sections of the community. Debt was in the past never regarded as a middle class issue but it's actually easier for the middle classes to get into debt because they have better access to credit."
Downturn
And the current economic downturn has produced victims from all walks of life. "For example last week we advised an estate agent who had lost his job.
“Staff hours are being cut, people may have been relying on overtime and lack of sales means people are not getting the commissions they were relying on."
Angela Welch says the knock-on affect of increased debt is less disposable income being spent on local businesses like bars and restaurants. "By the time clients come into us those luxuries are long gone."
And the charity fears reduced spending power will put yet more Ballymoney jobs at risk.
Jenni Archer says people did not necessarily over-stretched themselves by buying houses they could not afford. "Maybe they are coming out of a lower fixed term payments, but also the general cost of living has gone up.
"We are seeing the consequences of job losses - of course we are seeing lots of people who were working in the construction industry but people are falling behind for all sorts of reasons."
One feint silver lining, according to Angela Welch, is CAB clients feel less stigmatised over finding themselves in debt and as a result, are seeking help earlier.
“It's something we have never experienced before, people are coming in and saying 'I'm just about managing but I'm not going to hold on much longer.' It's a good time to be able to give budgeting advice."
“One of the messages we want to get across is get help quickly, for one thing we have a waiting list and it's important to get ion touch as soon as possible."
Options
But she adds: "It's also important to say that although we give advice we don't have a magic wand. We can give people options but the options are not always palatable. In some case the best option may be to let the bank repossess the house."
Of course since the property bubble has burst, former home owners in many cases may be unable to repay their initial loan, even after the house is sold. When that happens the last remaining option may be bankruptcy.
Meanwhile, measures that may alleviate debt remain stalled while the Stormont Executive is still not meeting.
Social Development minister Margaret Ritchie has proposed a Mortgage to Rent Scheme, which would see Housing Associations buying properties and renting them back to homeowners .
While this scheme is still at the consultation stage, recommendations on fuel poverty have still not been considered because of the row between the DUP and Sinn Fein over the devolution policing and justice powers.
