Mortgage holders will have 'more to spend'
HOUSEHOLDERS with a mortgage and a job will have more to spend this year.
Low-interest tracker mortgages will boost spending power, a leading business body said.
And most other householders should see an increase in their spending in 2014, the latest consumer monitor from IBEC said.
Private sector employment was growing and gross incomes were on the up, while the deal on the promissory note was set to boost confidence, it said.
And the impact of the controversial property tax would be less than many feared, IBEC claimed.
The average household will be hit with a €150 bill for the new homes tax, which IBEC said was just 0.3pc of after-tax income per household.
Most households will only have a very marginal increase in what they can spend this year, but next year the majority will see more significant rises.
The record-low European Central Bank rate at 0.75pc was helping mortgaged households.
Around 375,000 households have tracker mortgages linked to the ECB rate.
Low tracker rates will balance out higher costs for energy this year, IBEC economist Reetta Suonpera said.
"Consumer fundamentals have now stabilised and the promissory note deal could provide real momentum to consumer confidence," she said.
"The private sector began to add jobs during 2012, a tentative bottoming-out of house prices means that household net wealth is no longer falling, and debt levels are starting to ease, albeit from high levels," she added.
But ongoing price rises will hit households where the adults are unemployed, despite their social welfare income having been protected by low inflation up to now.
Ms Suonpera said if there was no further bad news, consumer sentiment should recover during 2013. But any unforeseen shocks pose a risk to the fragile recovery seen to date.
"It appears that the worst is now over for the consumer market, but a more substantial improvement in consumer fundamentals and sentiment is required before we see a robust growth in consumer spending," she said.
She said many of the fundamentals for the economy were now stabilising, with a tentative bottoming-out in the housing market.
IBEC calculated that households with a mortgage would have an average of €38,277 left after paying tax this year.