Home buyers need much higher incomes than they did a decade ago

New mortgage customers now need significantly higher incomes to buy a home, compared to the peak property price more than a decade ago, according to new analysis from the Banking and Payments Federation of Ireland (BPFI).

According to the organization’s latest Mortgage Market Profile Report, 13% of first-time buyer mortgages and 7% of move-in mortgages were backed by income of up to €60,000 last year, compared with 51 % and 28% respectively in 2005.

It also found that the median total household income of first-time buyers increased from €71,000 to €77,000 between 2019 and 2021.

While the average drawdown reached record levels in both the new buyer and existing move-in segments in 2021 and the average move-in loan on new properties was only around €4,000 less than in 2008.

“It’s important to note, however, that the mortgage market is very different now,” said Brian Hayes, chief executive of BPFI.

“Mortgage interest relief was available on qualified home loans disbursed between 2004 and 2012 and played a key role in lowering mortgage costs.”

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“In 2008 alone, home buyers benefited from almost €705 million. In addition, in 2015, the Central Bank of Ireland introduced limits on the loan-to-value and loan-to-income (LTI) ratios of new mortgages.”

The report also shows that Dublin remains at the top of the mortgage markets, with just over 30% of homes bought in the year to the end of last December located there.

Cork was second with 11.4% followed by Galway and Limerick.

The highest median basic household income, monthly payments, loan values, and property values ​​for first-time buyers or those building new homes are found in Wicklow.

The study also found that 83% of mortgage customers build or buy property in the county where they live.

81% of first time buyers buy property in their own county.

However, in Meath, Kildare and Wicklow, Dublin borrowers accounted for 30-32% of first-time buyer mortgages and 17-24% of home purchase mortgages in those counties.

This is because incomes in the capital tend to be higher than in other counties, while those moving from Dublin can also benefit from higher value guarantees.

The report also shows that only 23% of home mortgages in Limerick were secured on new properties, the lowest proportion in the country.

It also found that the mortgage market rebounded strongly last year, with withdrawal volumes rising 22.1% year-on-year to 43,494, the most since 2009.

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