Morgan Kelly’s solution: €6bn mortgage bailout would solve crisis
A €6bn DEBT forgiveness scheme for struggling Irish mortgage-holders would end the current economic crisis, according to UCD economist Morgan Kelly.
"Spending €5bn to €6bn on mortgage forgiveness, mortgage principle reduction and allowing those hopelessly indebted to walk away from mortgages, would probably solve most of the problem," Professor Kelly said at a conference in Dublin yesterday.
“This sum to sort out tens of thousands of people with big problems does not seem enormous,” he added.
The UCD academic estimated that 20pc of people are having difficulty paying their mortgages. This was based on the default figure in Florida where there was a similar housing bubble.
He said that mortgages would be reduced to a level “deemed affordable” while others would be allowed to leave their properties “without being pursued for outstanding debts".
The UCD academic, who has a reputation for gloomy economic predictions, also warned that house prices still had a long way to go before they bottomed out, and warned that "big falls" remained for commercial property prices.
He was speaking at the Irish Society of New Economists conference in Dublin.