Surging house prices and the cost-of-living squeeze are forcing buyers to borrow more to secure a home while their purchasing power has been depleted.
The average first-time buyer mortgage was €263,000 in June, according to figures from the Banking and Payments Federation.
This is up by €30,000 compared with what a typical first-time buyer was borrowing a year ago.
And it is the highest level since the data series began in 2003, the banks said.
The previous record was €251,831 at the start of 2008.
In separate figures it has emerged that house hunters have €27,000 less spending power than a year ago.
The typical mortgage seeker now has €11,000 less savings to put towards a deposit than mortgage seekers in the same position a year ago, according to Daftmortgages.ie. They plan to make up the difference by borrowing more, the broker found.
Reduced spending power for these house hunters may be a result of spending bouncing back as the Covid-19 pandemic restrictions lifted
New buyers have reduced spending power due to their savings being lower as a result of expenditure bouncing back after Covid-19 pandemic restrictions were lifted, and due to the rising cost of living.
This is in the context of asking property prices increasing by €30,000 in the three months to June compared with the same quarter last year.
Daftmortgages.ie said the running down of savings and the household costs squeeze means house hunters now have €27,000 less to spend on a home than a year ago, or a reduction of 9pc.
Mortgage seekers have an average of €11,000 less in savings to put towards a deposit than a year ago.
Larger borrowings will be required to make up the shortfall. This will result in a €59 increase in their monthly mortgage repayments making their repayments go from €872 to €931 per month.
Over a year, first-time buyer couples will end up spending an extra €708 on their mortgage repayments per year than a typical new buyer last year.
General manager at Daftmortgages.ie Paul Monahan said: “It could be argued that the 15pc reduced saving and therefore 9pc reduced spending power for these house hunters may be a result of spending bouncing back as the Covid-19 pandemic restrictions lifted or could also be due to these customers feeling the pinch due to rising cost of living.”
Meanwhile, the number of first-time buyers approved for a mortgage in June was down slightly to 2,675.
This is compared with 2,755 in the same month last year, according to Banking and Payments Federation figures.
However, there continues to be a strong rise in the numbers of mortgage holders switching provider.
Last month saw a 153pc rise in the number of switchers to 1,789, the banks said.
In the April to June period just under 6,000 new buyers drew down a mortgage.
This is up by 1,099 compared with the same period last year, a rise of 22.5pc.
A total of 11,985 new mortgages to the value of €3.13bn were drawn down by borrowers during the second quarter of this year.
This represents an increase of 24.5pc in volume and 40.6pc in value on the corresponding second quarter of last year.
First-time buyers remained the single largest segment accounting for half of the market. Boosted by increased switching activity, the number of mortgage approvals in the twelve months ending June 2022 reached 55,467.
This is the highest level recorded since the Banking Federation data series began in 2011.
The banks revealed that a total of 5,960 mortgages were approved in June this year.
They said 2,675 were for first-time buyers.
Meanwhile, mover purchasers accounted for 1,185 home loans.
Mortgages approved in June were valued at €1.66bn – of which first-time buyers accounted for €737m and €401m by mover purchasers, the lenders revealed.
Meanwhile, a analysis of the Property Price Register shows that home sales prices rose by 14pc in the second quarter of this year compared to the same period last year.
The median price for a home in Ireland is €285,000.
This is up €35,000 when compared with the same period last year, according to Valuemyhome.
Since the first three months of last year, the Irish housing market has charted six consecutive quarters of price inflation.
The length of this price surge now matches that of 2006 to 2007, the very peak of the ‘Celtic Tiger’ boom years.