Monday 22 January 2018

Town-country divide on mortgage lending

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Getty Images

Charlie Weston Personal Finance Editor

AN urban-rural divide is set to open up on mortgage lending, it has emerged. This is because banks plan to discriminate against buyers seeking mortgages for properties in the countryside and instead concentrate on funding buyers of homes in cities and large towns.

Experts predict house prices to keep falling in rural areas, while they reckon prices have stabilised in urban locations, particularly Dublin.

Latest figures from the Central Statistics Office show that the price of houses and apartments in Dublin increased for a second month in a row in April.

House prices in Dublin are now down 55pc from their peak.

The CSO says the latest property price index shows tentative signs of a stabilisation of the Dublin market. Prices in the capital rose by 0.7pc in March and 0.5pc in April.

But they have continued to fall outside the capital city. They have dropped by 47pc since the market hit a high in early 2007.

When banks return to mortgage lending they are set to favour city and town locations, according to information obtained from lenders by Karl Deeter of Irish Mortgage Brokers.

He said a number of lenders had indicated they would favour mortgage applications from those based in more populous areas. Lenders are already demanding larger deposits on loans for apartments outside of the main cities of Dublin, Cork, Limerick and Galway.

Just 2,630 new mortgages to the value of €450m were issued during the first three months of this year, according to the Irish Banking Federation. This level of lending is more than 90pc below where it was during the housing boom.

Recent house price figures show that a two-speed housing market is now developing, said economist Dermot O'Leary of Goodbody Stockbrokers.

The latest rental survey pointed to increases in rents in the urban areas of Dublin and Cork, while rents elsewhere continued to fall.

Irish Independent

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