Mortgage approval rates are surging

The amount of mortgages approvals increased by a third last month. The vast majority was first-time buyers.

With mortgage approval rates increasing, we can expect property prices to keep rising.

The Banking and Payments Federation figures also showed the amount of the approvals is increasing.

A reason for rapid increase could be from Eoghan Murphy, the Housing Minister, reviewing the Help-to-Buy scheme. This review is a result of the Help-to-Buy scheme being accused of inflating house prices.

The increase of approvals does not mean an increase in mortgage drawdowns, as finding a home increases in difficulty. With the housing shortage, houses for sale have multiple offers so you have to outbid the others.

Forecasts predict mortgage lending to go up from €5.7 billion last year to €7.5 billion this year. Within the next three years it might even reach €13 billion.

Mortgage approvals were up from 3,046 last May to 4,124 this May. That makes a 35 percent increase in a year.

We can expect to see an increase of competition among mortgage lending banks with lower interest rates or …

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Help-to-buy incentive under scrutiny

This past Sunday, current Housing Minister Eoghan Murphy said on RTE’s The Week in Politics that the Help-to-Buy initiative introduced by his predecessor is currently under review. Since its introduction in January under former Finance Minister Michael Noonan and former Housing Minister Simon Coveney, the Help-to-Buy initiative has already received nearly 7,000 applicants and has successfully helped a great percentage of them with the purchase or building of their first home. However, the initiative has recently come under fire for exacerbating the problems it intended to solve, and there is speculation that it may be dissolved.

 

The purpose of the Help-to-Buy incentive was to encourage first buyers to enter the market by helping applicants with their deposit through the refund of applicants’ income tax and DIRT other the past 4 years. It applies to first time buyers who either purchase or build new residential properties, and allows them to receive 5% of the purchase price of their new home, with an upward limit of €20,000. It is hoped that the incentive would help more people climb the property ladder, …

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Mortgage Market Update

The Financial Broker gives readers an overview on currently property prices and mortgage market conditions.

The Central Statistics Office published a report showing price inflation on property had increased 10.7% in the past year up to February. A similar report reveal how the number of newly build housing last year was 14,932 units when estimates denote a demand of up to 50,000 units. These numbers illustrate a problem in the current mortgage market, which this article pinpoints the causes of. The author laments about rising property prices, arguing that many potential home buyers have missed out on the prime time to purchase property, and are currently no long capable of affording the housing of their choice at an acceptable price.

The author attributes the current housing price and rent inflation in Ireland as consequences of a lack of supply in urban areas instead of lax macro-prudential regulations. In fact, she argues that current Central Bank regulations are too restrictive, and thus have prevented demanders from being able to locate and buy affordable housing. While the prudential regulations have lowered the …

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Bank of Ireland cuts mortgage rates

Bank of Ireland recently announced new and reduced mortgage rates, which will be available starting Friday the 16th. The highlight is cuts of fixed mortgages rates up to 0.35% for both existing customers and for first-time buyers. The bank decision ups its competition in Ireland’s reviving property market and marks Bank of Ireland as the fourth lender that has cut its rates within the last two months. KBC Bank cut its fixed rate in April, and currently has one of the lowest rates on the market. Permanent TSB and Ulster Bank are the other two lenders who have also taken similar measures.

 

Bank of Ireland’s fixed rate mortgages are based on a property’s loan to value ratio. It has cut its rates for first time buyers with an Loan to Value ratio of 81-90% by 0.25%. Customers with greater down payments and lower Loan to Values ratios also see their mortgage rates cut between 0.1%-0.25%. The greatest reductions however have been for Bank of Ireland’s existing customers, who see their mortgage rates fall by 0.35% if they have a …

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Q102 Drive at 5 features Irish Mortgage Brokers, Wednesday 26th April

Scott and Venetia had us on their show to discuss the property market and to go through some of the things that are affecting it.

They also found out how much he paid for his last haircut and a few other unusual things that you don’t normally hear on radio!

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First time buyers who don’t buy new homes

First time buyers have been asking ‘what about those of us who are not buying a new home? Why don’t we get any help like the people using help to buy?’. The answer is that you do, at least for the remainder of 2017.

There is still a DIRT relief for first time buyers scheme in action, it started in 2014 and is ongoing until the 31st of December.

The scheme doesn’t help you get a deposit, rather it’s a refund after you buy, see the notes below taken from the Revenue.ie website:

Section 266A of the Taxes Consolidation Act 1997 provides for refunds of Deposit Interest Retention Tax (DIRT) for first-time buyers who purchase a house or apartment to live in as their home. It also applies to first time buyers who self-build a home to live in.

Who can claim it?

A first-time buyer of a house or apartment who purchases or self-builds a property between 14 October 2014 and 31 December 2017 may be entitled to claim a refund of DIRT.

The first-time buyer must not have …

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Pat Kenny Show on Newstalk 106, featuring Irish Mortgage Brokers

Pat Kenny had Lorcan Sirr from DIT and Karl Deeter from our company on to talk about the property market in particular in light of the changes announced by the Central Bank.

The conversation covered many topics in the market and outlined where so many issues in housing are arising.

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Central Bank statement on mortgage rules review

23 November 2016

Outcome of Review of Mortgage Measures announced

§  Review confirms that the overall framework is appropriate and the measures have contributed to financial and economic stability.

§  Review based on extensive analytical work and public consultation.

§  Refinements to improve the effectiveness and sustainability of the measures.

*** More detail at press conference today at 14:30***

The Central Bank of Ireland today (23 November) announced the outcome of the review of the mortgage measures, following an extensive consultation and evaluation process. The mortgage measures were introduced in February 2015 to enhance the resilience of both borrowers and the banking sector.

The review affirms that the overall framework is appropriate and the measures are contributing to financial and economic stability, reducing the risk of unsustainable lending and borrowing.

Following the review, the framework is broadly unchanged. The 3.5 times ceiling on the loan to income (LTI) ratio remains. Requirements for buy to let borrowers and the exemptions for negative equity mortgage borrowers from the measures also remain unchanged.

The review identified a number of refinements to improve the …

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The unaffordability index of Irish housing

This picture speaks a thousand words and in many cases tens of thousands of earnings that a person would have to have in order to afford an average home in different parts of the country. We used recent data from the Daft report and then broke it down into borrowings and compared that to average wages.

The column after ‘county’ is the average price in that region. If we assume a first time buyer will typically want a 90% mortgage we then look at the amount of earnings they’d need to have in order to get the loan.

The last column is where the real story lies, it compares prices in the area to average wages taken from the CSO.

Anything in a white cell with a minus is very affordable, anything in black means you’d have to be earning above average wage to buy a property in the area.

If the cell has a red background that is showing you where the difference is greater than €10,000.

It’s fairly clear that cities and in some cases …

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2016 Mortgage lending rules submission by Irish Mortgage Brokers

We sent our research and thoughts on the lending rules to the Central Bank as part of their industry consultation process regarding the existing mortgage lending rules.

While we are critical of them in particular for first time buyers, we haven’t had an issue on other aspects of it (such as controls for investors). The submission argues with supporting evidence for 90% loans for first time buyers to be available generally but to keep other controls generally in place, or to do nothing at all and give the adjustments more time to bed in.

Submission is here: 2016 Central Bank macroprudential rules submission Irish Mortgage Brokers

The findings of a survey carried out by Behavior and Attitudes of clients of Irish Mortgage Brokers, DNG and Hooke & MacDonald which was mentioned in the press is also available here: 2016 MacroPrudential review – survey findings

 

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