Mortgage applications at EBS increase by 66%

MORTGAGE applications at EBS Building Society surged 66% over the last three months compared with the first quarter as affordability improves.

The latest EBS/DKM affordability index found the average proportion of net income required to fund a first-time buyer mortgage has fallen by more than 50% in the past three years.

It predicts the cost of a mortgage for the average first-time buyer working couple will fall to 13% of their net income by December. The equivalent figure three years ago was 26.4%.

By December, the projected net repayments for a first-time buyer working couple on a €165,000 mortgage will have fallen by €513 per month since July 2008, roughly 43%. The equivalent drop in Dublin will be €643 per month, or 41% based on a €218,000 mortgage.

Director of membership business at EBS Dara Deering said: “September was a particularly busy month with more than double the level of applications that we received in February. A significant portion of this activity is being driven by first-time buyers, who now account for 45% of the house purchase market.

“While there continues to be a lack of clarity about how far the market has yet to fall, the reality is that for many first-time buyers and indeed second-time buyers, the home that they want, in a location that is suitable for them is likely to be very competitively priced at the moment.”

Prices for first-time buyers are down just over 19% in the year to July. Affordability is also helped by the European Central Bank deciding to drop interest rates from 4.25% to 1% since October last year.

Director with DKM Economic Consultants Annette Hughes said: “Generating housing transactions is the first step to recovery and to addressing the sluggish situation that has persisted for the past two years, despite improvements in affordability.

“However, negative equity fears and oversupply remain a concern and could hinder mobility in the housing market.”