Household financial distress at levels never seen before: Honohan
The mortgage arrears crisis here shows that household financial distress is at unprecedented levels, according to the Central Bank's governor.
Patrick Honohan has said long-term debt modification involving permanent debt relief is neccessary, but should not be widespread.
Governor Honohan said most people in Ireland believed they should service their loans, and are doing that.
However, he said the banks have not done enough for distressed borrowers, and the Central Bank will be setting expectations for lasting solutions.
Speaking at a Patrick Honohan conference on distressed property markets this morning said negative equity was not in itself a rationale for debt relief.
He said: "Household financial distress is at unprecedented levels in Ireland as can be seen, for example, from the extraordinary rates of arrears on the servicing even of mortgages secured on
owner-occupied homes.
"Permanent debt relief is not something that will be offered to all of those who have suffered a loss of wealth, but has to be limited to those who are truly over-indebted and close to insolvency. In particular negative equity is not in itself a rationale for debt relief."
