Number of professionals struggling to pay debt soars
THE number of professionals — including architects, doctors, and solicitors — struggling with mortgage and related property debt has soared over the past year.
The Phoenix Project, a nationwide debt charity set up to help borrowers in danger of losing their family home, says banks and vulture funds have dramatically ramped up pressure on those who can’t meet mounting debt repayments.
Speaking to the Sunday Independent, chairman John McGrath said banks are less willing to compromise, and have become “more aggressive” with borrowers in arrears.
“We are seeing people with five or six properties. Politicians, solicitors, barristers, consultants, doctors and senior members of university staffs, are among those struggling with repayments.
“About 25pc of our client base used to be made up of professionals — the rest were blue collar workers broadly working for the average industrial wage.
“But now 40pc of our clientele are from the ABC1 professional classes.
“That increase has occurred in the past 12 months, and we’re expecting it to go up further in the new year.
“From 2004 to 2008, when the boom was still on, professionals were getting interest-only mortgages for seven and 10 years.
“The end of that period has come and the banks are going back to charging capital, plus interest.
“Previously, they were rolling the interest-only mortgages on again.
“But now they want to fix their balance sheets and want repayment.
“Banks now require positive equity and they’re becoming more aggressive.
“They’re pushing harder and harder all the time.
“They were agreeing to adjournments in the past, but now they’re saying ‘no, we’re looking for an order for possession’.
“They have certainly racked up the pressure.
“Financial institutions have reached their breaking point and unfortunately banks have also reached that breaking point with a lot of borrowers.
“We can only keep the wa- ter out for so long.”
Ross Maguire, founder of New Beginning — a group of lawyers providing representation for those facing repossession — said there has been a noticeable increase in the number of doctors contacting them for help in recent weeks.
“The self-employed — particularly those who were in the construction industry — are among the hardest hit.
“Every single one of our clients is in full-time employment, and are on good salaries, but their problem is residual debt.
“There’s also a general trend now where people are facing up to their financial problems — and want to get them dealt with as soon as possible.”
He said this is driven by the fact that some borrowers “finally see light at the end of the tunnel”.
“They see a future for themselves and that is acting as an impetuous for them to try and deal with their debt.
“Previously people felt they were screwed — so they had a head-in-the-sand approach.
“But now workers, such as builders, quantity surveyors, and architects, are back in employment and they see the prospect of having their debt situation resolved.”
He said there is an “incentive” for this kind of borrower to agree on a plan going forward which would eventually resolve their money problems.
Figures show the number of mortgages in arrears has declined but it remains substantial.
Central Bank data shows more than 82,000 mortgages for principal private dwellings, around 11pc of the total, were in arrears in the second quarter of the year.
Around 35,000 of these had been in arrears for 720 days or more.