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Wednesday 26 October 2016

€51,000 deposit puts homes beyond the reach of workers

Published 07/03/2016 | 02:30

First-time buyers are being pushed out of the market due to the lending restrictions. Photo: posed/depositphotos
First-time buyers are being pushed out of the market due to the lending restrictions. Photo: posed/depositphotos

The deposit amount being used by buyers taking out a mortgage has shot up to €51,000.

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Stark new figures from the banks show the value of the average deposit has risen by 38pc in a year from €38,000 to an average of €51,000 for Dublin buyers, figures uncovered by the Irish Independent show.

The banking data shows a deposit of €20,000 being used outside of Dublin by the end of 2015, up from €16,000 in 2014.

In Galway, the average deposit is now €27,000, up from €21,000. And in Cork, it is €32,000, up from €24,000.Experts said this meant that qualifying for a mortgage was now beyond ordinary workers.

The figures were provided to mortgage brokers and estate agents by the Banking and Payments Federation in a presentation last Monday, but were left out of a publication given to the media on the same day.

The scale of the deposit used to secure a mortgage comes as a new survey shows that seven-out-of-10 people believe Central Bank rules on home-loan deposits should be changed or scrapped.

Central Bank lending restrictions that were introduced a year ago mean that to qualify for a mortgage, you have to have a deposit of 20pc of the property's value.

First-time buyers can qualify with 10pc of the property values for amounts borrowed up to €220,000, and 20pc for amounts over this.

A spokeswoman from the Irish Banking and Payments Federation (BPFI) confirmed that the figures were not issued to the media.

"I can confirm that this was not in the BPFI 'Housing Market Monitor' published on Monday. It was used as part of a presentation to stakeholders to offer more insight and context," she said.

There was no reply when she was asked if the figures on deposit sizes were kept from the media in case they would scare off potential mortgage applicants.

Figures earlier this week showed first-time buyers are being pushed out of the property market due to the lending limits.

Just over 1,000 want-to-be-buyers got approval for a mortgage in January.

Mortgage broker Karl Deeter said: "This is the price of protecting banks because for a person looking to buy a home, requiring another €20,000 means only two things: you stay a renter or you ask a preferably rich mum or dad for the money."

Most people feel the Central Bank lending rules should be eased, according to a survey commissioned by life insurer Royal London, and carried out on 1,000 adults here by iReach.

The survey results illustrated that general support exists for the Central Bank's lending rules, Joe Charles of Royal London said.

However, the majority of respondents feel that some fine tuning of the measures is needed, with 48pc suggesting that there should be some relaxation for first-time buyers.

Meanwhile, the housing crisis has worsened with news that the stock of homes for sale has reached its lowest level since records began in 2009.

There are just 26,773 properties for sale nationwide compared with January 2010, when there were twice as many homes on offer (54,121).

Irish Independent

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