Renowned Irish economist, Professor Morgan Kelly, has dire predictions for the financial future of Ireland’s mortgage market which will trickle down to the economy at large. As the world scoffed at his predictions four years ago, the property market did indeed crash but the victory for Kelly was bitter sweet. 

Professional Class Mortgage Debt Default on the Horizon

According to Professor Kelly, there is currently about £9.6 billion in questionable domestic loans which have been given to such professionals as doctors and lawyers on high end properties that were grabbed during the height of the mortgage meltdown. He feels that banks are not worried about these properties at the moment but there will soon come a time in which these will be the properties causing the new tidal wave of defaulted mortgage loans.

Current Cause for Concern in the Mortgage Market

Whilst high end properties mortgaged to business professionals are not currently a concern, Morgan goes on to emphasise that there are at the moment 165,000 mortgages in danger of default, the buy-to-let market. These mortgages are for homes purchased by the average homeowner. With an economy that is steadily spiralling downward, there is no doubt that many of these buy-to-let mortgages will in fact go into default.

Government Debt to Peak Because of Mortgage Defaults

In the end, Professor Kelly predicts that the debt pile of the government will peak at about £220 billion by sometime in 2015 largely due to these mortgage debts incurred by business professionals. This is based on the fact that there are approximately 10,000 of these mortgages out at an average of £967.6 million per loan. If his predictions materialise, this could lead up to a mortgage meltdown many times worse than the crisis in 2008-09.

Although Kelly is often referred to as ‘Dr. Doom’ because of his fatalistic financial forecasts for Ireland, the UK and on a global level as well, he hasn’t missed a beat in recent years. Although other economists are predicting another downturn in the market, none are as blatant in their prophecies as Kelly, which is perhaps why we should stand up and take note. He wasn’t wrong in 2008, hasn’t been wrong since, and this is precisely why many are heeding his predictions for another, even more disastrous mortgage meltdown in the very near future.