Thursday 23 November 2017

Movers have more financial firepower

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Charlie Weston

Charlie Weston

People moving home have built up a large amount of equity in their homes, ensuring they can outbid first-time buyers, new research indicates.

And movers tend to have bigger incomes, as they are further on in their careers.

The average mover borrowed just 66pc of the house value last year, according to the Central Bank.

First-time buyers were forced to borrow more, with the average new buyer getting a mortgage for 79pc of the value of their property they are purchasing.

The figures also show that both movers and new buyers are getting mortgages while staying within the income limits set by the Central Bank.

Regulatory rules allow both kinds of borrowers to get approval for up to three-and-a-half times their income.

In the second half of last year the average first-time buyer used an average of 2.9 times their household income to secure a mortgage.

Average second and subsequent borrowers borrowed using a multiple of 2.4 times household income.

Loan sizes were close to €200,000 on new mortgages for all borrower types in the second half of last year.

First-time buyers borrowed an average amount of €190,000 in the half-year period.

Movers borrowed an average of €220,000.

The average income of first-time buyers was €68,000, with movers having an income of €106,000 on average.

This means the average gross income of all borrowers was €83,000.

The Central Bank study, ‘Household Credit Market Report’, found that all households continue to reduce their overall debts, but borrowings remain high here compared with the rest of the European Union.

Debt per head is calculated at €30,199.

The average standard rate mortgage on outstanding debt in the first three months of this year was 3.75pc, down from the end of last year.

However, this is high compared with the rest of the Eurozone.

Half of all new buyers take out a fixed rate, with these rates falling over the last few months, the Central Bank report found.

Variable rates were more popular among movers and buy-to-let investors.

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