Wednesday 21 March 2018

Fall in first-time buyers blamed on lending rules

'Goodbody economist Juliet Tennent said:
'Goodbody economist Juliet Tennent said: "The rules are clearly having the biggest impact on the first-time buyers category" ' Photo: PA
Charlie Weston

Charlie Weston

There was a fall in the number of first-time buyers drawing down a mortgage in the final three months of last year.

New figures from the banks show that 3,813 new buyers took out a mortgage between October and December last.

This was 220 fewer mortgages than in the same quarter in 2014.

It was the first time since 2013 that there has been a fall-off in the number of first-time buyers in a quarter compared with a year earlier, according to the Banking and Payments Federation.

Central Bank lending restrictions, which have hit new buyers hard, have been blamed for the drop.

Some 8,103 mortgages were drawn down in the October to December period, valued at €1.451bn.

This is an increase of 6.9pc on the previous year. However, the figure represents a considerable slowdown on the number of people drawing down a mortgage compared with the first half of last year.

The Central Bank introduced lending restrictions last February, requiring a 20pc deposit for amounts borrowed over €220,000.

Goodbody economist Juliet Tennent said: "The rules are clearly having the biggest impact on the first-time buyers category."

Overall, last year there were 24,134 mortgages issued for house purchases. This compares with the 47,500 transactions recorded on the Property Price Register last year, with the data for 2015 not yet complete.

Davy economist Conall Mac Coille said this meant half of purchases were made by cash buyers: "Cash buyers still account for close to 50pc of transactions - a little surprising given the end of capital gains tax exemptions in December 2014."

He added that the returns from renting out a property were between 5pc and 6pc.

"Residential property still represents an attractive asset for many investors, with bank deposit rates now close to zero."

Meanwhile, figures provided to Fianna Fáil's Michael McGrath show Longford has the highest level of mortgage arrears, with 16.83pc of mortgages in arrears in the county, compared with 8.83pc in Cork, which has the lowest level of arrears.

Irish Independent

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