Business Irish

Tuesday 23 April 2019

First-time buyers hit by new mortgage restrictions

Charlie Weston Personal Finance Editor

BANKS and building societies are reluctant to give first-time buyers a mortgage for apartments, while they are also making it more difficult for new buyers by no longer accepting parental guarantees, a Davy Stockbrokers "mystery shopper" exercise shows.

However, the survey indicates that lenders are making more attractive mortgage offers to most first-time customers who want to buy a house.

But the survey also showed that banks and building societies have responded to the credit crunch by looking for more detailed information from applicants.


Davy carried out a "mystery shopping" exercise, with analysts posing as a 27-year-old single first-time buyers earning €60,000. In the second case, the example was a couple of the same age with the same income split between the two.

The stockbroker said the average offer for the single person was 7.8 times disposable income, compared with seven times in its survey last summer. The offer for a couple rose from 6.3 times to 6.5 times disposable income.

Davy said the offers were more attractive than it would have expected, perhaps due to political pressure on banks. But it says more affordable interest repayments suggest that banks are not passing on the full benefit of interest rate cuts.

The repayments as a percentage of disposable income have fallen by more than 30pc over a year. The stockbroker points out that its exercise involved only inquiries, and that it is aware of anecdotal evidence contradicting its findings.

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