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Government must take responsibility for scale of mortgage debt – SF

9 July, 2007

Sinn Féin spokesperson on Housing Arthur Morgan said that the scale of mortgage debt revealed in a department of environment report today did not surprise him. Sinn Féin according to Morgan repeatedly challenged the Government over recent years on their repeated claims that their were no affordability problems in the housing market and in relation to the fact that first time buyers were precariously over-borrowing for overpriced houses.

Morgan said, "Those who have creamed off huge profits as a result of the property boom of recent years - banks and estate agents in particular - misled the public to believe that the housing boom would continue forever and that house prices would continue to rise. This was never going to be the case. Those of us who raised concerns were dismissed as scaremongers.

"When challenged over the last number of years the Government continually claimed there were no affordability problems in the housing market. They made this claim despite the evolution of the 100% mortgage and the 40 year mortgage and the fact that young couple were borrowing unprecedented sums at a time of historically low interest rates. Numerous reports pointed to an overvaluation in the housing market. Yet the Government failed to act. A situation likely to lead to huge problems in the time ahead was allowed to flourish.

"Negative equity (where you have a property that is worth less than the amount outstanding on the mortgage) and house repossessions are now real dangers for many people.

"The Government refused to intervene to curb house price increases - indeed their policies including specific tax relief's contributed to the unprecedented escalation of house prices over the last decade. This failure is the chief reason for the dire predicament which new homeowners now find themselves in. Sinn Féin repeatedly pointed out that each day the Government failed to act, more young couples over borrowed for overpriced houses and placed themselves in serious risk of facing a situation of negative equity. Negative equity will be a real problem for those who took out 100% mortgages as house prices peaked in 2006. The Government also must take responsibility for failing to adequately warn people of the risks associated with 100% mortgages.

"The Government will have to clean up this mess which is of their own making. Government policy must seek to intervene to prevent principal home owners defaulting on loans and facing repossession of their home. Innovative policy proposals need to be developed to address this developing situation. More can and should be done terms of mortgage interest relief to help protect vulnerable homeowners in particular those on average and lower incomes." ENDS

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