Half of first-time buyers delay mortgage plans
THE cost of property is the single biggest challenge facing potential buyers.
And the pandemic is delaying the plans to buy a home for almost half of first-time buyers.
The findings come as this country went back on top of the ‘league of shame’ when it comes to mortgage rates.
Ireland has jumped from having the second-most expensive home loan rates to now sharing the position of being the most expensive with Greece.
New figures from the Central Bank show that the average interest rate did not move in November when compared with the previous month.
It stood at 2.79pc, although this was down 11 basis points on November 2019.
The average new mortgage rate in this country is more than double the average for the euro area, which was 1.31pc in November.
“Ireland and Greece had the joint highest mortgage interest rates across the euro area in November,” the Central Bank commented in its latest survey of retail interest rates.
The persistent high cost of mortgages in this country is despite new player Avant Money offering rates as low as 1.95pc to those with a lot of equity in their homes.
High rates are costing borrowers here around €2,000 more a year than the average costs across the eurozone.
But it is the cost of property that has emerged as the main stumbling block for 52pc of new buyers, according to the Bank of Ireland survey conducted at the end of last year.
Property prices continued to defy expectations by remaining stable and then rising in the past year, despite some predictions the virus would lead to panic selling and price cuts.
The survey also revealed that a lack of supply in desired areas and the inability for borrowers to save enough for a deposit continue to be seen as obstacles for those trying to get on the property ladder.
Conducted by Red C, the research was carried out with those aged between 25 and 45 who are planning to buy or build in the next few years.
Almost half of respondents said Covid-19 had delayed their plans to buy. However, almost one in four said the pandemic had accelerated their plans to buy a home.
One in five said Covid-19 has made them rethink the location they would like to buy in, with a similar proportion rethinking the type of property they would like to buy.
The average amount firsttime buyers are saving for a deposit has grown in 2020 compared with previous years.
Nearly a quarter of those surveyed are now saving between €500 and €750 per month, a 5pc rise on the 2019 findings.
Between €250 and €500 is still the most popular monthly amount saved by more than one quarter of respondents.
More than half of first-time buyers will require financial help from friends or family to save for a mortgage, with 27pc moving in with their parents to save money.
Bank of Ireland’s Brian Vaughan said: “While the cost of property is still a prominent issue, the research is also showing an increasing number of first-time buyers saving larger amounts towards their deposit, driven most likely by the lack of spending options this year.”