Rate hikes push singles from market

THE five interest rate hikes imposed by the European Central Bank are pushing single people out of the housing market, according to research from IFG Mortgages.

Internal research conducted by IFG Mortgages, Ireland’s largest independent mortgage group, suggests that in the third quarter of 2006, the proportion of single applications fell from 40% to 35%, reflecting the their long-held view that this group of first-time buyers would be first to suffer from any interest rate increase.

Managing director of IFG Mortgages Trevor Grant said: “With people generally marrying later in life, the market had witnessed a trend of people buying their first home while still single, however following the series of interest rate rises we are now seeing a marked return to the more traditional joint applications. Many first-time buyers are either buying with their future life partner or clubbing together with a friend to qualify for their first major purchase.”

IFG point out that over the past two years singletons and in particular single women had become the major force in the first-time buyers mortgage market, with the level of single applicants growing at a faster rate than joint applicants.

“This trend now seems to be reversing as singletons struggle with increasing house prices and reduced loan offers on the back of the five ECB interest rate increases,” IFG said.

Data from the IFG mortgage index shows that mortgage terms are lengthening.

“Thirty-year plus terms are now much more popular with 33% of applicants now opting for longer term mortgages compared to 19% this time last year and 26% in the second quarter of this year.

“Ultimately people are borrowing the maximum permitted, as house prices refuse to fall and accordingly, the only choice is to spread their repayments over a longer term,” IFG state.

The survey indicates that the average age for house purchase remains relatively static at 34, while the average age for re-mortgaging fell from 40 years of age to 38 years of age.