Mortgage rules are very unfair to young people
Published 07/03/2016 | 02:30
Nobody wants a return to the property price spiral of a decade ago. We have bitter experience of how that one ended. But our current mortgage rules leave young people paying very high rents and unable to save for unrealistic deposits.
Our report today shows that many young people are left facing a lifetime of renting - unless they are lucky enough to have well-off parents who can stump up the deposit. Apart from the profound injustice involved for a rising generation, there are societal implications for our future.
A big part of our social cohesion has been based on people having a stake in things by "owning their own walls". It has meant people took pride in their homes and, by extension, wanted to contribute to their community. But we have seen home ownership ratios decline due to the recession and now, ironically, that trend may continue due to undue Central Bank prudence associated with economic recovery.
Today, we report that the average deposit for a would-be house buyer in Dublin is €51,000. It is €27,000 in Galway and €32,000 in Cork, while across the nation, the average is €20,000.
It is no big surprise to read also, then, that just 1,000 mortgage applications were successful in January.
How is even a successful dual-income young couple, starting out in life, realistically expected to be capable of saving €51,000, while paying rents which have continued to spiral over the past two years?
The further irony and injustice of that situation is that a young couple would very likely pay less in mortgage repayments than they would in dead-money rent, which goes to pay somebody else's mortgage.
Meanwhile, we have a construction sector which is operating below capacity and not providing the jobs and spin-off spending which it is capable of delivering.
A society where only the rich can buy their own home is a society storing up considerable social problems for the future.