First-time buyers are putting down larger deposits than needed
MOST home buyers put down large deposits when getting a mortgage, new figures reveal.
First-time buyers also borrowed €20,000 more last year than the previous year, reflecting the rise in property prices.
Research from the Central Bank shows the average first-time buyer had a down payment that represented 20pc of the value of the property.
This is despite the rules allowing new buyers to qualify for a mortgage with a deposit of as low as 10pc.
Second-time buyers borrowed less than 70pc of the value of the property they were moving to.
The Central Bank’s lending rules require second and subsequent-time buyers to have a deposit of at least 20pc of the value of the property they are buying.
Higher numbers of both firstand second-time buyers are now also opting for fixed-rate mortgages in a bid to protect themselves against rising interest rates.
First-time buyers were typically aged 34 when taking out a mortgage, the Central Bank paper shows, with more singles than couples.
The average value of the property bought by first-time buyers was €273,000 last year, up by €22,000 on the previous year, for buyers who did not get an exemption to lending limits.
New buyers took out a mortgage of €206,000 on average, up €20,000 on the previous year.
Typical home sizes have not changed from 1,300 sq ft.
Six out of 10 first-time borrowers took out a fixed rate, with an average interest rate of 3.4pc, down from 3.6pc in 2016, according to the ‘Macroprudential Measures and Irish Mortgage Lending’ report.
“First-time buyers had a larger loan size, property value and income, compared with first-time buyers one year earlier,” it said.
First-time buyers got an exemption to the rules requiring borrowing to be capped at three times income for around a quarter of the value of lending last year. Movers who did not get an exemption from lending rules typically borrowed €232,000 last year, up by €14,500 on the previous year.
The average property value overall was €400,000, with the average income of the mover household coming in at €107,000. These houses tend to average 1,600 sq ft, according to the research. The borrowers had an average age of 41, and most were couples.
Few first-time buyers got an exemption allowing them to have a smaller deposit than 10pc, but one-in-six second and subsequent buyers got an exemption allowing them to have a smaller deposit than the 20pc required.
The average loan size and property value of second and subsequent buyers increased last year compared to 2016.
One-in-10 movers got an exemption from the rule requiring them to only borrow three-and-a-half times their income.
The rules mean first-time buyers need to have a deposit of at least 10pc to get mortgage approval, but banks can breach this limit for 5pc of loans.
Second-time buyers need a deposit of at least 20pc, but banks can allow exemptions for 20pc of lending to movers.