HOME LOAN SCHEME, WHICH LAUNCHES THIS FRI­DAY Will banks fol­low suit with their own deals?

Gorey Guardian - - NEWS -

COLUM MUR­PHY, the manag­ing di­rec­tor of Ke­hoe and As­so­ciates, says it will be in­trest­ing to see if the banks fol­low suit by of­fer­ing their own low-in­ter­est, fixed-rate, fixed-term mort­gages.

‘The new Re­build­ing Ire­land home loan is not a prod­uct that is avail­able in the mar­ket and the banks may fol­low suit if they are miss­ing a sec­tor,’ said Mr Mur­phy.

Wel­com­ing the new scheme, he said it will fill a gap in the mar­ket.

‘What I found in­ter­est­ing is that with a con­ven­tional loan from one of the pil­lar banks you will be stress tested, and the cur­rent in­ter­est rate might be fixed for five years. With the new scheme, there isn’t that need for stress test­ing be­cause it’s set at two per cent for the life of the loan,’ said Mr Mur­phy.

He said that un­der the new scheme, some­one earn­ing €40,000 a year could bor­row up to €200,000, with re­pay­ments of €850 a month, which is ‘a re­ally pos­i­tive step’.

Mr Mur­phy said the scheme ‘will be slightly in­fla­tion­ary’ for house prices.

‘But over the past 10 years, 95 per cent of the trans­ac­tions in the res­i­den­tial sec­tor have been for sec­ond-hand homes. There haven’t been any new homes,’ he said,

Mr Mur­phy said that cur­rently if you wanted to buy a three-bed semi in Wex­ford, there was only one devel­op­ment avail­able, but with a raft of plan­ning ap­pli­ca­tions for new de­vel­op­ments with the county coun­cil, that sit­u­a­tion will change con­sid­er­ably over the next year or two.

‘Now we have new homes com­ing on stream at the right time with the mar­ket pro­vid­ing a nat­u­ral so­lu­tion and re­spond­ing to sup­ply and de­mand.’

Many land­lords are get­ting out of rent­ing so the amount of rental stock is dry­ing up and rents are in­creas­ing.

‘This new scheme will en­able peo­ple to go out and buy their new house. Some­one bor­row­ing €150,000 at two per cent fixed for 20 years will be re­pay­ing €628 a month.. it’s 100 per cent aimed at new buy­ers and you can use a re­build­ing Ire­land loan for a new home, a sec­ond-hand home or you own self-build and it’s suit­able for in­stance for a farmer’s son build­ing on the land,’ said Mr Mur­phy. ‘It’s a very pos­i­tive devel­op­ment.’

Colum Mur­phy.

Newspapers in English

Newspapers from Ireland

© PressReader. All rights reserved.