Tuesday 12 December 2017

Good time to buy, but bad time to get a loan

Valerie McGrath

According to recent research carried out by the EBS, 67pc of prospective first-time buyers believe that now is a good time to purchase.

Of course it is -if they can get a mortgage. As things stand, more than half of those applying for a homeloan are being turned down.

The banks are lending very little. According to leading auctioneers, people in the motor industry, construction workers, airline employees, landscape gardeners, architects and estate agents themselves, among others, have little or no chance of getting a mortgage at the present time.

Even career bankers are feeling the breeze. Additionally three in every four prospective first-time buyers are concerned about their job or their partner's job security.

For them this is no time to take on a mortgage. Even if they could get it.

Not only must you have a clean credit rating, but a single person with a good, secure job would need to have €1,500 left over each month after meeting their mortgage and other loan payments before getting approval for a home loan.

And mortgage providers like to see some history of saving. This is all reminiscent of the 1960s when we were required to save for at least a year with the building society of choice before they would even countenance a mortgage.

There is an interesting change in buyer behaviour. Two-thirds of those asked stated that they would stay in their first home forever. This is putting paid to the "three-home syndrome" prevalent for the last 20 years, where first-time buyers moved into a small apartment for six or seven years, moving on to a bigger family home where they would stay for 20 years or so.

Eventually they would downsize again, when their families had grown and flown the nest.

Now it's a case of buying properly in the first instance -- a house in which they can remain, one bigger than they currently need, in an established location and one close to good schools, transport and shops.

There is, at the moment, a slight movement on both new and second-hand homes, particularly if the price is right. Traditional family homes with three or four bedrooms, priced at €800,000 or less, are beginning to move quite well.

This is evidenced by the number of 'Sold' and 'Sale Agreed' boards, although the latter have to be viewed sceptically, since they often fall through. Trophy houses, over the €1m mark, are very sluggish, to put it mildly.

Houses in the cities and suburbs are more likely to sell than houses in small towns or rural areas. Private treaty sales are the order of the day -- auctions are still dead in the water.

A house swap may sound like a good proposition, but selling agents tell me that it is hard to get the figures right and many vendors who plan to go down this route have to resort to straight sales in the end.

And as for those folks who would, in better times, have bought a house and completely gutted the interior because they couldn't possibly tolerate the decor in the kitchen/bedroom/living-room. They are also facing a tough time because no one is going to be advanced serious money to alter their homes.

When I was a youngster, there was a programme on every Saturday night on Radio Eireann. It was called Make Do and Mend. It was listened to, with complete dedication, by every family on our road, and no doubt by families all over the country.

The presenter had a thick Irish brogue and the start of his programme always seemed to be "Take a bucket ... " We kids thought it was hilarious, but the grown-ups took it very seriously indeed. Even the most ham-fisted male would make an effort to follow the directions on how to solve small household emergencies, spending as little as possible.

I look back, with some admiration, at how Radio Eireann, the precursor of RTE, had its finger on the pulse of the nation -- a poor nation -- at that time, and I wonder, as I watch yet another boring showhouse competition, have the present day programme planners any idea of the real world?

Because the real world, as we currently have it, specifies that only the favoured few are going to be advanced large sums of money to redo their homes. This is belt-tightening time. Time to make do and mend.

Irish Independent

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