I estimate that around 3% of the 600,000 mortgages are deliberate defaulters. They are paying nothing at all, or nothing significant. They could pay a lot more. They have not cut back on their holidays. They are paying the credit union ahead of the mortgage. They are drinking or gambling the money.
Hi Brendan
My point is really that the 20,000 figure is just an estimate and there is absolutely no way of verifying this number. It's really nothing more than an educated guess on your part and every time you bring it up you are instantly met with a chorus of protests that you cannot verify that figure - which, in fairness, is true - so why waste precious media time debating something that is essentially unknowable?
Just to be clear, I am not doubting for a moment that there is a significant cohort of defaulting borrowers that could afford to make the scheduled repayments on their mortgage (as per its original terms or as subsequently modified) but have made a rational decision that it is not in their financial interests to continue doing so. It would be truly extraordinary if this was not the case given the prevalence of negative equity and the lack of any apparent consequences for defaulting before an extended period of time has passed. However, I don't see any point in trying to quantify the number of defaulting borrowers that fall into this category.
I've said this a number of times on here before (and I suspect we disagree on this point) but it doesn't make any difference to me whether a default is deliberate or accidental, strategic or accidental, cynical or genuine.
If a borrower can't or won't repay a loan (in accordance with its original terms or as may be renegotiated to the satisfaction of both parties), then the borrower should be entitled (and, in my opinion, encouraged) to exercise the remedies agreed under the terms of the mortgage or as provided for by statute, within a reasonable timeframe and at a reasonable cost. In my opinion, the ability to enter into bargains with each other and to have those bargains recognised and enforced by our legal system is an important freedom.
I really don't understand why anybody with an unsustainable mortgage on a property in negative equity would make any payments whatsoever to their lender. What's the point? They will ultimately lose the property anyway so making any further payments to their lender is akin to setting their money on fire.
Given the generosity of SVR mortgage holders to continue funding the accommodation needs of those who can't or simply won't repay their mortgages, a much more logical reaction for a defaulting borrower would be to stop all repayments and simply save the amount that would otherwise have been spent on housing.
Who knows, in a few years you might get one of those sweet "mortgage to rent deals", thereby overtaking those poor fools on the social housing list. When you think about it, mortgage repayments are really only for suckers under our system!
You are absolutely correct that strategic defaulters have no reason whatsoever to consult with debt campaigners or politicians. However, such defaulters regularly consult with solicitors for advice on the terms of their mortgages, court procedures, etc. Solicitors are paid to give honest advice on a confidential basis and not to offer moral or ethical judgments to their clients.