Average monthly mortgage repayments down by 43%

AVERAGE mortgage repayments for a first-time buyer have fallen €513 or 43% a month since July last year.

Figures from The Mortgage Finance Company also show the equivalent drop in Dublin is €643 per month or 41%, based on a €218,000 mortgage.

Mortgage interest rates, which directly impact affordability for new buyers, have reduced significantly in the past 12 months.

Last September, the average standard variable rate in Ireland was 5.82% compared with 3.15% now.

This equates to an average saving to mortgage holders of €400 per month on a typical mortgage of €250,000.

Director of The Mortgage Finance Company Kevin McNerney said: “With historically low interest rates combined with significant reductions in house prices, people’s ability to afford a mortgage has increased dramatically.”

He said that the average working couple buying their first home are now paying around 13% of their take- home pay in mortgage repayments, with the figure increasing to 16% in Dublin.

This compares with the peak in December 2006 when repayments were more than 26% of a couple’s income and more than 31% in Dublin.

“All of this means that first-time buyers should find it easier to get good value and take their first step onto the property ladder.

“The only question that someone should have is whether they are secure in their current employment. If they are then they should seriously consider taking advantage of the significantly reduced prices and historically low interest rates,” said Mr McNerney.

He said he believes 2010 will see a steady increase in activity levels in the residential property market with the majority of the transactions being done by first-time buyers.

“There are many people out there who have been waiting in the wings for the market to hit the bottom and there are some very strong indicators that we are coming close to that.

“Factored in to this, the significantly reduced interest rates, means that the cost of borrowing money is cheaper than it has ever been,” he said.

For any potential first-time buyer or person in a position to trade-up, now is an ideal time to buy property and take advantage of the current market conditions, according to Mr McNerney.

“While everyone knows that the price of property will not be increasing at the levels that were seen in recent years, the cost of borrowing on a mortgage will.

“So if you were to buy now I would recommend you take a good three- or five-year fixed rate.

“Although the value of your property may not increase by much in the next five years, the monthly cost of paying a mortgage on the property will,” he said.

He said that if a potential home buyer was to wait for a year or two before purchasing, they might get the same property for around the same price as today but it would end up costing you a lot more to afford on a monthly basis.