Construction BUSINESS

The most recent Central Bank Household Credit Market Report reveals the very dramatic changes underway, particularly for first-time buyers (FTBs), according to Brokers Ireland, which represents 1,250 broker firms throughout the country. Rachel McGovern, Director, Financial Services at Brokers Ireland, said the changes will have a major impact into the future on individuals, families and society at large.

“The report shows that only 14pc of borrowers are now aged under 30, a major change from just under a third in 2006.  Forty percent of FTBs have a loan term greater than 30 years.  And on top of that the average household income of FTBs in Dublin is €89,049, echoing the recent Banking and Payments Federation of Ireland report showing that FTBs with incomes exceeding €80,000 a year accounted for 36pc of mortgage drawdowns last year compared with just 15pc in 2004.”

Rachel McGovern.

She said these figures display “just how dramatically the situation for FTBs has changed in a decade.”

“While house price inflation of recent years has helped many longer term borrowers in exiting negative equity or at least coming close to doing so, aspiring FTBs are paying rents substantially higher than the cost of servicing a mortgage. This fact has been seized upon as an opportunity by global funds in a market where the provision of housing has become financialised.

“Meanwhile those who succeed in getting their first home are paying interest rates way ahead of the Euro area norm, 1.51pc more in August on all new mortgages. In addition they do not have access to the better value long-term interest rates for periods of 20 years and more enjoyed by many of their European neighbours.”

She said these trends evident in the report from the Central Bank are no good.  “They will have huge implications for individuals, families and wider society into the future,” she warned.