The human face of our mortgage time bomb
Myles Fleming tells Maeve Sheehan of the plight shared by thousands across the country
THEY are paying a boom-time mortgage on a recessionary wage, their income has been slashed and things are going to get even worse after the Budget, leaving even less to feed the gargantuan monster that is their house loan.
Myles Fleming and his partner Susanne are in the twilight zone of mortgage-holders: not yet in arrears but peering into the abyss; lucky enough to have jobs but just shy of the tipping point that will send them spiralling into financial meltdown. At this precarious juncture, all it takes to push them over the edge is one of life's unexpected emergencies -- job loss, illness or worse.
These are the people who populate economist Morgan Kelly's appalling vista of mass mortgage defaults coming down the tracks.
Officially, we are told that Myles and Susanne don't constitute that big a problem. Taoiseach Brian Cowen said the number of troubled mortgage holders was "overstated".
But it's hard to ignore economists' claims of a ticking time bomb of mortgage debt. Last week, nine economists joined Kelly's call for a debt-forgiveness scheme, which is essential to the economy's recovery.
An estimated 200,000 mortgage-holders are in negative equity. At present, 36,000 have not paid their mortgage for three months or more. New figures are expected to show that up to 45,000 mortgage-holders are renegotiating payments with their lenders.
Thousands more are expected to get into difficulty next year as savings and other reserves simply run out.
That is the position in which Myles, 34, and Susanne now find themselves.
They returned from Australia and he set up his own office fit-out business. Susanne has a childcare business in Malahide.
They put down a deposit on a €400,000 home in Donabate, north Dublin, at Christmas 2007. Their prosperity was fleeting.
Within a year, Myles's business started drying up. He optimistically thought the financial uncertainty would pass and signed up for a university degree course in international relations. Student life proved short lived.
His partner's childcare business suffered and their financial situation dramatically worsened in a very short timeframe. Myles "knocked on many doors" before finding part-time shift work at a nightclub, where he earns €12 an hour.
Their income has plummeted to €1,400 a month -- less than the monthly mortgage repayments due on a house that, when Myles last checked, was worth €270,000.
They have negotiated with the bank to make "interest-only" repayments of €600 a month. It is their second "interest-only" term -- extracted out of the bank only after they missed a couple of mortgage payments -- and will last only for three months, until Christmas.
After that, they are entirely at the mercy of the banks.
The couple are particularly concerned because they are expecting their first child. They have "colossal" arrears racked up on their utility bills.
"There are so many outgoings and so you pick the ones you are going to pay," said Myles. "We have €50 to €60 a week for food. We put €20 worth of diesel in the car. We are not able to save anything: clothes, prams, they are all hand-me-downs."
According to Karl Deeter of Irish Mortgage Brokers, who is one of the economists calling for debt forgiveness, the tipping point comes when 65 per cent of income is spent on repaying debts. Given that most first-time buyers during the boom got mortgages that took up to 40 per cent of their income, all it takes is a 20 per cent reduction in their income for them to be pushed over the edge and into debt.
Myles and his partner could reach that point.
Scores of others have skipped the country, throwing the keys back in the letterbox, taking the risk that no one will come after them for the debt. But even if they wanted to, Myles says they couldn't afford it.
In any case, with the 12-month moratorium on repossessions and the promised measures to tackle personal debt, all the experts say struggling mortgage-holders should just stay in their homes.
Anyway, Myles wants to stay. Morgan Kelly said last week that one family that defaults is a social pariah but 200,000 are a powerful political constituency. Myles believes that constituency has to make its voice heard: "I don't understand why people are so placid about it here. I look at my road and 60 per cent of the men are unemployed. It's everywhere, not just me.
"People will stay in their homes: what can they do to us? These guys are knocking on the door looking for money they are never going to get."