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Now it takes up to four years to save a mortgage deposit


Sharon Donnery: concerns about changing strict rules. Photo: David Conachy

Sharon Donnery: concerns about changing strict rules. Photo: David Conachy

Sharon Donnery: concerns about changing strict rules. Photo: David Conachy

Surging rents and the Central Bank lending rules mean it now takes up to four years to save for a deposit to get a mortgage.

It takes up to two years longer to accumulate the down- payment for a Dublin property than it took before the Central Bank introduced strict rules requiring buyers to have large deposits.

Dublin buyers now need up to €40,000 more in a deposit than they did two years ago, in order to satisfy lending rules.

Researchers found it takes between two-and-a-half and four years to build up a deposit for a Dublin home.

In urban areas outside Dublin it can take a year-and-a- half to accumulate a deposit lump sum.

The timeframe is under one year for rural areas, according to research by economists in the Central Bank.

Researchers found that someone buying in South Dublin now needs a down payment of €76,000.

This is €41,000 more than the couple needed for this area two years ago.

Read more: Cash-poor buyers could pay €50,000 more for mortgage

In other parts of Dublin, the size of the deposit required has increased by between €10,000 and €22,000.

Outside Dublin, buyers need an extra €5,000 for the down payment.

Controversial lending rules mean first-time buyers have to have a deposit of more than 20pc of the value of the property for amounts borrowed over €220,000.

They have to have a deposit of 10pc for borrowings up to €220,000. There are also restrictions what they can borrow based on their income.

The research comes ahead of the Budget - which is expected to see a tax rebate announced for buyers of new homes, something economists said would only further push property prices.

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Rising house prices are also making it more difficult for new buyers to put the funds together for a deposit to satisfy lending rules.

Central Bank economists Conor Kelly and Fergal McCann wrote in the study: "We show that, relative to mid-2014, the time to save has increased in Dublin by between one and two years, and under one year in other areas."

The study looked at how first-time buyers get a deposit together for a three-bed property, while renting a two-bed property. It considered a couple with no children.

The Central Bank is reviewing the mortgages caps it introduced in February last year.

Property industry groups have claimed the rules are too restrictive.

Rachel McGovern, chief operations officer of PIBA warned that home ownership is "a target that's constantly moving ahead of those in their 20s and 30s".

The Central Bank is due to announce the outcome of the review of the rules next month.

Deputy Governor Sharon Donnery said recently she had concerns about changing the rules.

The mortgage restrictions are aimed at preventing another property bubble.

But strong rises in rents are sucking money from those trying to get "mortgage ready".

Rents rose by 10pc in the year up to June.

The monthly cost of renting is now close to €1,000 nationally, according to the Residential Tenancies Board.

Read more: Comment - Home buyers are battling a market that's a total mess

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