“We’re just existing, not living!” Mortgage stress and the concealed costs of coping with crisis

Abstract

Following the financial crisis, an extensive literature has examined the vulnerabilities facing mortgagors in default and foreclosure. However, in addition to these “overt casualties” of the crash, many households are struggling to meet their mortgage payments by enduring severe cutbacks to their quality of life. The experiences of these “unrevealed casualties” of the financial crisis and the coping strategies they employ to respond to mortgage stress remain under-explored. Drawing on survey data of Irish mortgagors (n = 433), this paper examines the impacts of mortgage stress upon quality of life and mortgagors’ coping strategies to respond to their financial difficulties. The findings suggest that mortgage stress affects a broader range of households than previously considered; mortgage stressed households adopt a range of expenditure, employment, finance and housing-related responses; and more punitive responses correlate with greater mortgage stress levels, thereby providing a fuller account of the real cost of coping with the crisis impacts.

Keywords:

• Mortgage stress
• financialisation
• coping strategy
• homeownership; quality of life
• Ireland

Acknowledgements

The authors would like to thank the editors of Housing Studies and the four anonymous reviewers who provided detailed and constructive feedback. Any remaining errors are our own.

Notes

1. In this paper, the terms mortgage default and foreclosure (US) and mortgage arrears and repossession (UK) are used interchangeably.

2. The “Planning and Development Act 2000” considers a household to demonstrate an affordability problem if their housing payments exceed one-third of their net income.

3. This is the average net-income for an Irish mortgagor living in an urban area (CSO, 2012b).

4. As per the guidance of the European Commission (2008), this figure of €985 is calculated from the national at-risk of poverty threshold which is equivalent to 60 per cent of median monthly income.

5. Universal social charge is a tax payable on gross income with rates varying between 2 and 7 per cent.

6. PRSI is Pay Related Social Insurance and is charged to all employees and some self-employed persons and goes into the Social Insurance Fund which pays for welfare benefits and pensions.