Kkma - interest only v rent? Well, actually on present sales prices an interest only loan may be cheaper than renting.
However, in the scenario under discussion we're talking about people who borrowed in the boom which means they paid twice the present price.
We have to compare the interest only cost of the boom price loan versus present rents.
If interest rates set at 4% :-
House presently selling at 200k. Boom price 400k. Borrower owes, say, 360k.
If lnterest set at 4% this means 14.400 p.a. interest.
The rent for this price of house would be ca. 12k.
Similarly a two bed apt in Dublin city now selling at 160k -this suffered a big drop from ca. 400k.
Again, the rent would be ca. 12k p.a. and the interest also would be ca. 14-15K
If ,however, the govnt set a 3% interest level - still lower than trackers , then the picture changes. The rent and interest costs would be similar.
There would be many exceptions to the rent levels I describe, and doubtless a poster will tell me that one can easily rent a house for 500 euros a month. i 'm mainly talking about Dublin ,and mentioned a couple of properties at prices and rents I'm familiar with.
But,even with exceptions to the rent v. interest examples, if the govnt set a low interest rate and fixed it at least for a few years, I'm convinced that a majority of those in trouble would benefit - as would the banks, governments and ultimately the rest of us.