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Debt Tsunami Threatens UnemployedbusinessUnemployed and struggling with the mortgage?If sub-prime mortgages from the USA caused theinitial earthquake in the global financial system, itmay be ordinarily sound domestic mortgages thatprovide the aftershock, writes JOSEPH MORGANThe website halfaloaf.ie was set up in 2009as a networking forum for the unemployed.Given the way unemploymenthas increased by over 200,000 in the past year,and is predicted to rise by at least another 80,000in 2010, it was a timely launch. According to CentralStatistics Office (CSO) figures, the number ofclaimants is now 436,936.Some of the financial consequences of this arebecoming more apparent. Many Irish banks arestarting to reveal the growing number of mortgagesreported to be in arrears. Permanent TSBreported that bad loans rose from €15 millionto €189 million in the first half of 2009. Withinthe past few days, Ulster Bank reported that 3.3percent of its mortgage book is over ninety daysin arrears. These small banks are the tip of theiceberg.Given the push by government, financial institutionsand even family to persuade people to buytheir own homes in the past 20 years, it would beconservative to assume that only half of those wholost their job in the past year have a mortgage andthat only half of those who will lose their job in2010 have a mortgage. Hard data on this is difficultto find in Ireland.Let’s say, conservatively, that 170,000 may beunemployed with a mortgage in 2010. That figureseems reasonable at less than one third of the totalunemployed by the end of the year. If the averagemortgage is around €200,000 then we are lookingat a total of mortgages supported by no income atsomewhere around the €34 billion mark; a big holein Irish banks’ balance sheets.This may all sound like a “back of an envelopecalculation” but that would seem to be in the rightregion given that, according to Central Bank figures,there is a total of over €113 billion in mortgagesowed in Ireland. A further sensibility checkis that in the first six months of 2008 more than63,600 new mortgages were issued with an overallvalue of €13.8 billion.At current interest rates, the average mortgageof €200,000 gives monthly repayments in theregion of €1,100 depending on the type of mortgageand who the lender is.The nightmare scenariomust be getting firedfrom what you thoughtwas a safe job withthe bank, seeing yourmortgage paymentsincrease as interest ratesrise and then having yourhouse repossessed byyour ex-employer.Fusion Magazine 21