Home repossessions - Effort to pay debt must be rewarded

A clear majority of 72% of the repossession cases being brought to court involve mortgage owners who borrowed an average of nearly €236,000 during 2006 and 2007, as the property bubble was at its height, according to a survey conducted by the Economic and Social Research Institute.

The study involved 540 repossession cases before the Master of the High Court during July of this year. In some instances the amount borrowed increased to over €270,000 for a number of properties that are currently unoccupied. The average arrears on the property before the courts is €30,000, but this increases to over €35,000 for a number of properties that have been abandoned or unoccupied. This means that those people are already facing arrears of almost one-eighth of the money originally borrowed.

Many of those loans were provided as the property bubble was about to burst. While the property prices were at their height, banks and other financial institutions loaned money to people who used their homes as collateral. In one of the instances cited in today’s story, a family borrowed €169,000 to pay off business debts, using as collateral the home that they purchased six years earlier for €40,000. This would seem to suggest recklessness on the part of the lender.