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€400m property pot

THE EBS has identified a €400m pot for mortgage customers this year. The move comes on the back of new data showing that housing affordability is improving and returning to mid-1990s levels.

According to the index, 11.7pc of an average first-time-buyer working couple's net disposable income was required to fund a mortgage last December.

This means that house affordability in this country is at its best level since before the birth of the Celtic Tiger.

Although this figure increased to just over 14pc when the mortgage interest relief was scrapped, it is still significantly lower than the 26.4pc levels recorded at the peak of the housing boom seven years ago.

Conal Clerkin, head of mortgages at EBS, said yesterday's figures represent further evidence of stabilisation in the housing market, which "will encourage those wishing to purchase homes to seek mortgage approval".

However, the removal of mortgage interest relief and of the weekly PRSI-free allowance, as well as the introduction of the local property tax, will affect housing affordability, the new EBS/DKM index found.

However, despite a slight knock-on effect seen in January, an improvement in affordability – seen throughout 2012 – is expected to be evident again in February's figures.

DKM's analysis added that there are "tentative signs" that property prices are at, or close to, the bottom, with transaction and mortgage trends "encouraging".