Best mortgage interest rates for first time buyers

The current market is heavily weighted in favour of the buyer and for that reason we have seen more first time buyers interested in finding out how much they may qualify for, albeit that they may not plan to buy any time soon, many people still seem to be holding out for the ‘market bottom’, and naturally we don’t know when that time is, will be, or was (because it could have been last week, only time will tell), it is only with hindsight that the actual bottom can ever be accurately identified.

Another reason is that there are expected rate cuts coming, the next will be delivered at the 4th of December meeting of the ECB next Thursday. Many potential buyers are thus going to wait to see what kind of drop is delivered, if Trichet indicates that another may be in the pipeline it will have a strange effect of causing the inverse of what monetary policy is intended for.

The question we are getting recently is ‘what are the best mortgage interest rates for first time buyers?’. At the moment the best rates on the market are by AIB and Halifax.

AIB came out with a market shaking rate last week of a 1yr fixed for First Time Buyers of 3.25% with a maximum loan amount of 92%

Halifax then responded this week with 2yr fixed rate of 3.2% to a maximum loan to value of 90%.

Interestingly, both of these rates are actually below the present base rate! (as I write, soon they will likely be above it). They are both definitely above the Euribor which is the actual cost of funds which was 3.879% yesterday. This is a move by both banks to set out their stall and confidently tell first time buyers that they are in the market and willing to lend at great prices. If only their confidence was infectious!

The reality is that some banks have the funding to put aside an amount for first time buyers where they are essentialy giving money away for free (because cost of funds is well in excess of the rates being charged) and there is still not a deluge of buyers to the market which to our firm would suggest that property prices still have some way to go as well as the offer being ill timed, the December/January period was always quiet in the property sales market even during the boom.

Perhaps 2009 will give a clearer picture to the future of the Irish property market whether the outlook is good or bad some additional insight would be welcome news to the market.

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