Responding to the Crisis: The experiences and coping strategies of mortgage stressed households in Ireland,’

Ireland experienced a pronounced property bubble from the mid 1990s to late 2000s, which was driven, in part, by the implementation of neoliberal policies within the banking sector and housing system. Housing policy was strongly orientated toward expanding home ownership, particularly among low income groups, which was enabled by a sustained liberalisation within the mortgage market. The bubble led to huge house price increases, resulting in a major housing affordability problem. Households’ access to ownership was sustained by lengthening loan terms and allowing borrowers leverage their incomes to ever greater multiples, creating unsustainable levels of mortgage debt encumbrance. In the context of the current economic recession, Irish households’ are managing huge mortgage debt alongside falling incomes, high unemployment and rising costs of living. This combination of factors has created a massive mortgage arrears problem, with 18% of total outstanding mortgages in arrears, equating to €24.7 bn worth of loans.
It is within this context that this paper examines the neoliberal practices and policies that led to the housing market crash and its impact upon mortgagors. Households’ experiences of mortgage stress and their coping strategies are discussed in order to bring greater focus on the social impacts and consequences of the crisis. Data has been gathered from a large scale survey conducted in north Dublin; an area which saw major mortgage market and development expansion. The paper begins with a brief outline of the major policy reforms in the banking and housing sectors that contributed to the bubble, as well as an overview of some of the mortgage borrowing and development trends. This is followed by a discussion of the methodology employed regarding the survey and interpretation of its results. The paper then examines the main drivers of mortgage related stress, paying particular attention to the lending practices of financial institutions, and this is followed by analysis of households’ coping strategies with their financial difficulties.