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Mortgages are our real priority

THE opposition parties were setting out the job creation plans over the weekend. Unemployment is traditionally the central issue in recessions. Promising to bring it to an end is the staple response of politicians.

In this unique crisis, however, joblessness is far from the only issue. It may not even be the central one. Dreadful as it is for those concerned, and tragic as enforced emigration may be, this time there will be serious difficulties for those in work, as well as for the unemployed.

The politicians of the incoming government need to raise their eyes from the standard scripts and apply imagination and courage to some of these looming problems.

Keeping people in their homes is going to be one of the biggest. The latest figures show that the number of people seeking support to help pay their mortgages from the Department of Social Protection has risen five-fold since 2007, to 18,000.

Most of those receiving the €65m so far paid out would have one earner unemployed. This assistance is intended for extreme cases, and is meant to be temporary. New measures have been introduced, and others discussed, but much more may be needed to avoid widespread defaults and repossessions of houses.

Incredibly, one in five of those seeking this assistance were lent sums equal to six or eight times their salary. Over the next few years, ECB interest rates are likely to rise by a couple of percentage points, putting tens of thousands of similar households under financial pressure.

Large-scale repossession of houses would not only be a social disaster, but would pull another plank from the falling property market and ratchet up even more bank losses. The new government will have to think hard about who carries those losses and how the billions involved in the bank rescues could be used to avoid such a mortgage default disaster.

So far, the expected members of that government are making a fuss about renegotiating the terms of the bailout. If by this they mean the interest rate charged -- as seems to be the case -- they are getting their priorities wrong.

The terms need to be changed so that the most important rescues, such as home purchases, come first, and borrowed money is spent where it it will do most good for economic recovery -- which is also where it will do most good for European recovery.

Irish Independent